ECONOMY

Euro bankers optimistic

Bank of Greece Governor Lucas Papademos said yesterday the physical introduction of the euro will help to contain eurozone inflation in the medium term as it will increase price transparency. «The completion of the transition to the euro with the physical introduction of euros and the conversion of prices and services into euros will positively affect prices in the mid-term,» Papademos said in an interview with the daily Eleftherotypia, published yesterday. The eurozone inflation rate fell to 2.1 percent year-on-year, a one-and-a-half-year low, in November, down from October’s 2.4 percent and May’s eight-year high of 3.4 percent. The ECB has a self-imposed 2-percent ceiling for inflation in the mid-term. «More price transparency across the eurozone will boost competitiveness and put pressure on prices. This will result in price conversion… to lower levels,» he said. After the ECB’s decision to keep steady the minimum refinancing rate at 3.25 percent in November, Papademos said there is room left for further moves if conditions are conducive. The ECB has cut a point off rates since the September attacks in the United States and will meet next on January 3. Also yesterday, European Central Bank President Wim Duisenberg voiced cautious optimism about the eurozone economy, predicting a moderate upturn in the course of next year. In an interview with Dutch television less than two days before the rollout of euro notes and coins, Duisenberg also said he expected the single euro to appreciate against the dollar and denied plans to stand down next year. «I think we may well have reached the trough… I expect a recovery in the course of 2002, though it will be slow. I see no recession,» Duisenberg said. The eurozone’s economy should be expanding at an annual rate of more than 2 percent at the end of 2002, provided a US recovery materializes as expected, the ECB head said. On average, growth would be almost 1 percent next year, Duisenberg added. The 66-year-old Dutchman also denied a deal existed between him and France for him to leave office early 2002, saying he did not expect to step down next year. «I won’t step down in the near future. I like what I’m doing,» he said. Asked whether one could expect him to stand down next year, Duisenberg said: «No, I don’t think so.»