ECB to face 'uncomfortable' period ahead

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FRANKFURT, Nov 27 (AFP): European Central Bank vice president Lucas Papademos said yesterday that the ECB faced an uncomfortable combination of rising inflation and slower growth in the months ahead.
"The current conjuncture seems to point to an uncomfortable, though temporary, combination of higher inflation and somewhat slower economic growth in the coming months," Papademos said in a speech posted on the ECB website.
"Inflation risks and financial market volatility confront us with significant challenges," he warned in an address delivered in the Cypriot capital Nicosia.
"The ongoing process of risk reappraisal and repricing in financial markets could be more protracted than previously expected and may have a broader impact on financial markets and the economy," Papademos said.
Effects from a home loan crisis in the United States might slow growth for some time in the eurozone, while inflation was being fuelled by higher prices for oil and food items such as milk and butter.