Euro finmins sound alarm on inflation, growth seen OK

By Krista Hughes and Jan Strupczewski

BRDO, Slovenia (Reuters) - Finance ministers of the euro currency zone defended the region's economic performance on Friday after the IMF cut its growth forecasts, saying the bigger danger was inflation, notably of food and oil prices.

"Multi-millionaires can deal with food price rises with no trouble at all," Jean-Claude Juncker, who chaired talks between ministers and European Central Bank chief Jean-Claude Trichet, told a news conference after the meeting.

"Those living on 300, 400, 500, 600, 700 euros can't live with runaway inflation," Juncker said.

Trichet said likewise and together with Juncker pleaded for governments to avoid excessive rises in indirect taxes and other policies that might boost inflation, which hit a record 3.5 percent in March in the 15-economy euro zone.

The joint message, together with the underlying tone of comments from ministers throughout day's meetings, suggests that politicians are uniting behind the ECB's policy to keep inflation in check.

The ECB's inflation fight has seen it keep rates on hold since June 2007 in the face of criticism from some ministers that monetary policy was too restrictive and hurting growth.

"I don't think this (the current inflation rate) means that the European Central Bank is alone in combating inflation. Inflation is a concern for all governments," said Juncker, who is also the prime minister of Luxembourg.

Ministers and central bankers also said that the strong euro -- which hit a record high of $1.5904 <EUR=> to the dollar in March and has in the past been pilloried by politicians as harmful to growth -- was helping contain inflation.