The eurozone economy has absorbed the impact of high oil prices to date, but could see some second-round inflationary effects in 2007, European Commissioner for economic and monetary affairs Joaquin Almunia said today.
Speaking at a conference organised by the Economic Journalists Association, Almunia said the euro zone's interest rates remain 'accommodative' at current levels, but reiterated that the European Central Bank is widely expected to raise interest rates by another 25 basis points to 3.50 per cent in December.
Almunia noted however that the ECB's rate hikes are not likely to affect eurozone growth in 2006 or 2007.
Regarding risks to the eurozone economy, Almunia highlighted that the US housing market slowdown could provoke lower-than-forecast gross domestic product growth there next year, but noted that he is not pessimistic about the repercussions for the eurozone.