European Central Bank President Jean-Claude Trichet urged companies and workers to join the fight against inflation by not pumping up wage settlements on the back of soaring oil prices.
Trichet, in an interview that appeared in three leading newspapers across the eurozone on Saturday, also said that Europe should do its utmost to crank up its growth rate by making its economy more flexible.
A recent rise in inflation will prove temporary, the world's second most powerful central banker said, as long as rising oil prices do not feed through into higher wages.
"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 the 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.
The ECB president's interview, published in Italy, France and Spain, amounted to a concerted effort to convince residents in the 12-nation area that inflationary pressures should subside as long as wages pressures remain muted - something Trichet argued at his news conference after the ECB left rates unchanged on June 3.
Eurozone inflation leaped to 2.5 percent in May from 1.7 percent two months earlier as oil prices reached record highs. The year 2004 now unexpectedly looks set to be the fifth in a row the central bank will miss its target of keeping inflation below two percent.
The ECB has in the past been lenient towards inflation being boosted by volatile components such as energy and food, pointing out that bond markets, consumers and firms all expected inflation to remain moderate.
But this time is different, as inflationary expectations are creeping up and risk causing an acceleration in consumer price growth. Analysts say that might bring forward any expected ECB monetary tightening at a time that the single currency bloc has only just started to recover and economic data are still mixed.
Switzerland unexpectedly raised interest rates last week citing inflationary pressures, as did the United Kingdom the week before.
Financial markets and economists are expecting the ECB to stay put throughout most of the year and starting lifting interest rates from their record low of two percent by 2005.
Trichet denied the central bank had not done enough to speed up the euro zone's anaemic growth rates, saying faster growth in the United States was due to structural handicaps here, and not caused by too tight monetary policy.
"Europe encounters structural obstacles in its development which explain a growth in gross domestic product lower than that seen in other industrialised countries," Trichet was quoted by Le Monde, another newspaper where the interview appeared.
High productivity in America largely explained why it was growing faster than the eurozone. But while Europe should aim for faster growth, the United States too had to do their homework, as the low US savings ratio contributed to global imbalances.
The combination of weak growth in Europe and a lack of savings in America has lead to a persistently widening US current account deficit, weakening the dollar. Central bankers have long warned of disorderly adjustments in currency markets, should the two large economic blocs fail to address the issue.
The US current account deficit grew to a new record in the first quarter of 2004 - reaching 5.1 percent of US economic output, up from 4.6 percent in the previous quarter.
Trichet's reminder that revamping the European economy and bringing more prosperity is largely the task of governments comes after recent comments from Italy that a political body should be set up to balance the ECB's power.
But Trichet said such closer co-operation with European Union leaders is not needed and that the central bank must remain independent.
"The Ecofin council (of EU finance ministers) and the Eurogroup (meeting of euro zone finance ministers and ECB) are already the equivalent of a European "collective finance minister", Trichet said in Le Monde.
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