Euro zone inflation is set to drop below two percent, provided that wage demands do not soar on the back of high oil prices, European Central Bank President Jean-Claude Trichet was quoted as saying on Saturday.
"Looking beyond the spike in prices in the short term, inflation will fall back to align itself with our definition of price stability under two percent and close to two percent," Trichet said in an interview with Italian daily La Repubblica.
"That presupposes there shouldn't be any secondary effects and that's why we made an appeal to social partners to avoid any inflationary spiral," Trichet added.
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