BRUSSELS, Nov 30 - There are a number of risks to the inflationary outlook, European Central Bank President Jean-Claude Trichet said in hawkish testimony on Tuesday that signalled the central bank has a slight bias towards raising interest rates in coming months.
His remarks before the Economic and Monetary Affairs Committee of the European Parliament, two days before the ECB's Governing Council sits down to decide on interest rates, suggests that the ECB is more concerned about the inflationary dangers than risks to growth.
Trichet stressed several times that monetary policy must remain firmly committed to price stabilility and ensure that higher headline inflation does not raise inflationary expectations or lead to broader inflationary pressures.
"Price stability is a necessary condition for being effective in fostering sustainable growth as well as supporting employment and social cohesion," Trichet said.
On growth he noted that despite a moderation in the pace of economic growth in the second half of this year, growth should proceed at around 2 percent in 2005.