The European Central Bank's president warned Thursday that inflation may remain high for months, raising questions about the possibility of an eventual interest-rate hike, and urged governments to bolster measures to tackle the eurozone debt crisis, AP reported. Jean-Claude Trichet's comments came after the ECB left its main interest rate unchanged at 1 percent on Thursday for the 20th consecutive month. The decision was expected although annual inflation in the 17-nation eurozone rose to 2.3 percent in December, above its target and a two-year high. The bank's mandate is to keep inflation «close to but below 2 percent.» Trichet said the ECB sees evidence of «short-term upward pressure,» mainly owing to energy prices, and inflation could temporarily increase further before returning to target levels later in the year. Raising interest rates is a tool to combat inflation, but can dampen economic growth. Trichet's comments helped the euro surge to $1.3339 from as low as $1.3089 earlier Thursday. Data suggest that eurozone growth is maintaining its positive momentum, Trichet said at his post-decision news conference. However, «the risks to this economic outlook are still slightly tilted to the downside with uncertainty remaining elevated,» he said. The bank, the European Union and the 17 governments that share the euro are struggling to contain a crisis caused by too much state debt in some countries. Thursday's ECB meeting came amid mounting talk of increasing the powers and size of Europe's ¤440 billion ($570 billion) bailout fund. The ECB advocates «improvement in quantity and quality, namely in terms of the flexibility of intervention of this fund,» Trichet said. «Everything is urgent in the present circumstances, of course,» he said when asked if the need to do so is urgent. -- SPA
