Trichet pledges to focus on eurozone inflation

(LONDON) - European Central Bank President Jean-Claude Trichet pledged, in an interview published Monday, to focus on eurozone inflation, and not let interest-rate cuts in the United States and Britain distract the bank from tightening monetary policy.

Speaking to the Financial Times from Frankfurt, in an interview conducted on December 13, Trichet said any evidence of "second-round effects" leading to an acceleration in inflation would be "decisive".

"Other colleagues are in a different situation," Trichet told the business daily, while noting that the ECB was in contact with other major central banks to co-ordinate a response to the global credit crunch.

"I was very clear on behalf of the governing council (of the ECB); we would not let those second-round effects materialise," he added, referring to effects such as demands for wage increases among eurozone workers.

The ECB's main interest rate currently stands at 4.0 percent.

Eurozone inflation hit 3.1 percent in November, the highest level in six and a half years owing to rising costs of energy and food products.

ECB directors have a mandate to keep inflation slightly below 2.0 percent.

Trichet, whom the FT named as its "Person of the Year", downplayed the impact of the global credit crunch on the 13-nation eurozone economy, telling the paper that "is not our baseline scenario."

He noted, though, that risks were inevitable in any market economy, and it would be wrong "to say, now we want to eliminate creativity."