WIM DUISENBERG WARNS OF EURO ZONE INFLATION RISKS.

Whilst acknowledging that price stability is indeed prevailing in the Euro zone, Wim Duisenberg, the European Central Bank President, has issued a warning about the potential risks that could undermine this situation. The ECB President cited two developments in support of his argument in a statement he made on February 1 in Chicago, in the United States. The free float of the Brazilian Real and its subsequent slump in value have fuelled fresh fears about turmoil on the global financial markets and a potential decline in growth rates in 1999. What is more, pay demands in excess of growth and productivity levels, combined with a relaxation of budgetary discipline in the Euro countries could result in an upward pressure on prices.

In view of this situation, the ECB Governing Council will continue to watch...