Trichet denies speculators to blame for oil price rise

Jean-Claude Trichet has rejected the idea that sharp rises in commodity prices were mainly caused by -speculators.

“I’m not sure that speculation is the major culprit,” the European Central Bank president told a European parliament hearing yesterday. “The major issues are associated with supply and demand.”
Mr Trichet had concern about inflation and his remarks – plus a strong warning about the risk of excessive wage rises in the 15-nation eurozone – lifted expectations in financial markets that the ECB would next week raise its main interest rate by 0.25 percentage points to 4.25 per cent.

“Upside risks to price stability over the medium term have intensified over the past few months in a context of very vigorous money and credit growth,” he said.

The ECB expected annual eurozone inflation, at a 16-year high of 3.7 per cent in May, “to remain high for some time to come before moderating only gradually in 2009″. An official estimate of June’s figure is due on Mon-day, with some private-sector economists predicting it will be 3.9 per cent.

Mr Trichet’s comments made clear the ECB was sceptical about proposals in some countries for a tax to counter speculation.

Financial Times