In a thinly veiled reference to Ireland the European Central Bank president Mr Wim Duisenberg said economic divergences in the euro area could become a matter of concern to the bank.
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European president Mr Wim Duisenberg.
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Mr Duisenberg said in his speech at a news conference in Dublin national governments must implement economic policies which avoid situations where "painful adjustments" are needed later.
"There are types of divergence that can be a matter of concern," Mr Duisenberg said.
"I would refer in particular to a situation marked by high rates of national inflation as a result of excessive wage influences, an unsustainable expansion of profit margins or an expansionary stance in fiscal policy," he said.
Ireland was censured earlier this year by the EU for pursuing what it said was expansionary policies that boosted inflation.
Mr Duisenberg said it is up to national governments - and not the ECB - to take responsibility for national developments.
"For this purpose a wide range of economic policies is available . . . making use of them is not only in the interest of the euro area but also to the benefit of the individual country itself," he said.
"Well-balanced national economic policies should complement the single monetary policy with its primary objective of maintaining price stability in the euro area as a whole."
Euro zone inflation rose to 3.4 per cent in May from 2.9 per cent in April but Ireland recorded an inflation rate of 4.1 per cent.
AFP