European Central Bank President Jean Claude Trichet said the bank remains focused on fighting inflation even as economic growth slows.
"The ECB is resolute in its determination to keep medium to long-term inflation expectations in line with price stability" Mr Trichet told lawmakers at the European Parliament today.
Policy makers are concerned that past oil-price increases will prompt companies to raise prices and workers to demand higher wages to compensate for the increase in the cost of living.
The ECB kept interest rates at a seven-year high last week to push down inflation, which is running at 3.8 per cent, almost twice the bank's limit. At the same time, the euro-region economy is struggling to recover from a second-quarter contraction.
"There is a very strong concern in the governing council that higher energy and food prices may lead to the emergence of broad-based second-round effects," Mr Trichet said.
He said "the current episode of weak economic growth is expected to be followed by a gradual economic recovery.