France's Lagarde urges ECB to prioritise growth over combating inflation

France's Lagarde urges ECB to prioritise growth over combating inflation

	Published : Tue, 08 Jan 2008 08:27 By : Agencies Print this Story

PARIS (Thomson Financial) - French Finance Minister Christine Lagarde has urged the European Central Bank to make boosting euro zone growth a priority over combating inflation.

'If we have to choose between high inflation and high growth, or stabile inflation and lower growth, I certainly have a preference for temporarily higher inflation and higher growth,' Lagarde said in an interview with the International Herald Tribune.

'I hope this view is shared by some of our European partners and communicated to the European Central Bank,' she said.

The ECB's governing council will hold its next meeting on Thursday, when it is widely expected to keep its benchmark interest rate at 4 pct.

Lagarde said she hopes the ECB has changed its mind since it opted to leave rates unchanged at last month's governing council meeting.

'The views expressed in December are not necessarily cast in stone because factors around us are changing,' she said.

'The price of oil is a factor. The numbers we are getting out of the US at the moment are not particularly comforting.'

Yesterday however, ECB president Jean-Claude Trichet warned that there must be 'no complacency' with regards to the threat of inflation.

On next month's meeting of G7 finance ministers in Tokyo, Lagarde said member states are working on concrete proposals to strengthen the regulatory framework of financial markets in response to the US subprime crisis.

'We can't afford to waste time on this,' she said.

'We need to restore and boost the confidence of operators in the financial system.'

She said currencies will again feature on the G7 agenda, following its joint statement in October which called for an appreciation of the Chinese yuan but failed to mention the weakness of the dollar and the yen.

victoria.main@thomson.com

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