Awwal 18, 1432 H/Feb 21, 2011, SPA -- ECB policymakers sent a fresh round of inflation warnings on Monday, as euro zone data showed the region's economic recovery remained robust and likely to keep upward pressure on prices, according to Reuters. ECB policymakers have sounded increasingly aggressive on inflation this year since it topped the bank's target of just under two percent. Speaking late in Frankfurt, Juergen Stark, one of the ECB's inflation hardliners, added to the message. "In my view, risks to the medium-term outlook for price developments in the euro area as a whole could move to the upside," he said in a speech at the Goethe university "The latest economic developments suggest that the monetary policy of the ECB that has already been accommododative has become even more accommodative." In Hong Kong, ECB board member Lorenzo Bini Smaghi said the 17-country euro zone was enjoying better-than-expected economic growth, but warned rising prices were becoming a concern and that higher food and energy prices may be something economies have to get used to. "Inflation is higher than expected because of global events. We all have to understand to what extent this higher inflation is due to temporary or a longer underlying phenomenon," he said. "There is pressure on prices of agricultural products and this may not be a temporary phenomenon, it may be a permanent one, the same for energy." Financial markets have been gradually bringing forward the date at which they expect the ECB to start hiking rates. Economists polled by Reuters see it waiting until the final stages of the year although traders and investors see a move as early as the middle of the year. Athanasios Orphanides, another ECB policymaker, struck a similar tone in an interview with the Wall Street Journal on Monday, saying it could not be ruled out that euro zone inflation will stay above the ECB's target of just under 2 percent for longer than expected. Fresh data on manufacturing and German sentiment published on Monday backed the central bank's belief that the euro zone recovery remains on firmly on track. Activity in the euro zone's factories and private sector grew faster than expected this month and is pushing up prices, new data showed. German business sentiment also improved in February. The closely watched Ifo index hit a record high, signalling Europe's largest economy is still carrying strong momentum despite recent spending cuts and slower growth elsewhere in Europe.
