Euro-zone inflation seen staying near 3 pct

FRANKFURT (Reuters) - The European Central Bank cannot bring euro-zone inflation below 2 percent in the short term but is still strongly committed to price stability, ECB Vice-President Lucas Papademos said in a newspaper interview.

Papademos told Greece's Ta Nea paper that strong rises in energy and food prices were expected to keep inflation close to 3 percent in coming months before declining later in the year.

The ECB was determined to stop current high inflation rates from having knock-on effects on future prices and from driving up inflation expectations.

"As the Governing Council stressed during its recent meeting in Athens, it is strongly committed to maintaining price stability over the medium term, thereby preserving the purchasing power of all euro area citizens," he told the paper, according to a transcript released by the ECB.

"It should be clear, however, that the ECB cannot ensure that inflation remains below 2 percent in the short term, as this may not be possible due to the temporary impact of unanticipated and uncontrollable shocks to price stability."

Papademos said the current level of ECB interest rates, which have been kept at 4 percent for the last 11 months, should help to achieve the goal of inflation below but close to 2 percent in the medium term.

But the ECB did not have the power to make sure inflation was low in all 15 countries now using the euro currency, even if price stability was achieved at euro-zone level, he said.

In April, euro-zone inflation eased slightly to 3.3 percent from March's record high of 3.6 percent, but national inflation rates ranged from 1.7 percent in the Netherlands to 6.2 percent in Slovenia.

TOUGH TALK