Surge in oil prices means inflation risk

EUROPEAN Central Bank council members including Axel Weber and Yves Mersch said the surge in oil prices risks pushing up inflation as economic growth accelerates, indicating the bank is poised to raise interest rates.

Inflation risks “have to be countered in an appropriate way”, Weber told reporters in Berlin yesterday, saying that the 2.5% benchmark interest rate is still “very low”.

Mersch in an interview in Luxembourg yesterday didn’t rule out that the ECB may revise its 2.2% inflation forecast for 2006.