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European Central Bank President Jean- Claude Trichet said the bank must set interest rates with the sole goal of maintaining price stability, rebuffing calls from the French and Italian governments for it to take growth into account.

“It's crucial that the Governing Council sets the appropriate monetary policy stance on the basis of no other considerations than the delivery of price stability in the medium term,'' Trichet said at a conference in Vienna today. The bank's current policy stance “will contribute to achieving our objective,'' he said.

The ECB has held its key rate at a six-year high of 4 percent to contain inflation, which accelerated to 3.6 percent last month, the fastest pace in 16 years. That's helped drive the euro to a record against the dollar, threatening to deepen Europe's economic slowdown and leading to calls from some governments for the ECB to take more account of growth.

French Finance Minister Christine Lagarde said yesterday that the gap between the ECB's benchmark rate and that of the U.S. Federal Reserve is a “bit too big'' and that a “more flexible'' ECB could help narrow the difference. The Fed's main rate is now at 2.25 percent.

Berlusconi Wades In

Italian Prime Minister-elect Silvio Berlusconi said April 16 that the ECB should consider more than just targeting low inflation when setting monetary policy payday loans in 1 hour credit report. “The ECB must have broader functions, with a majority deciding, to go beyond controlling inflation,'' he said.

Trichet repeated that he's concerned about the euro's gains, which are undermining the outlook for European exports. “There have been at times sharp fluctuations between major floating currencies and we're concerned about their possible implications for economic and financial stability,'' he said.

Still, speaking at the same conference as Trichet, ECB council member Klaus Liebscher said the bank has to “closely monitor'' all developments and act preemptively if necessary to prevent surging oil and food prices from feeding into wages.

Economists at Deutsche Bank AG, HSBC Securities and JPMorgan Chase & Co. last week bet accelerating inflation will force the ECB to keep interest rates at 4 percent for longer than previously anticipated. The economists said the bank will start cutting interest rates in the final quarter of this year, having previously anticipated a reduction by the end of the third quarter.

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