Spain blames ECB over oil price jump

Spanish Prime Minister Jose Luis Rodriguez Zapatero on Saturday blamed the European Central Bank for Friday's jump in the oil price and some market interest rates and said ECB president Jean Claude Trichet should be "more prudent" in his comments about interest rates.
"I would recommend a bit more prudence to Mr Trichet," Zapatero said in the city of Leon, referring to Trichet's remarks on Thursday suggesting a possible rise in interest rates next month. "We all respect the independence of the European Central Bank but we all expect the European Central Bank to behave responsibly," Zapatero said, in remarks broadcast on Spanish media.
Trichet surprised markets on Thursday by saying there could be a rise in eurozone interest rates next month to contain inflation. "I don't say it's certain. I say it's possible," Trichet said after an ECB policy meeting which left its key interest rate unchanged at 4.0 percent.
Zapatero, whose country's economy is facing a steep construction slowdown just as inflation is rising, noted that Trichet's remarks were followed by "a fresh rise in Euribor and also a rise in oil, surely exaggerated." The Euribor rate is a key determinant of Spanish mortgage rates.
Zapatero's comments were unusually blunt criticism by a leading European politician of the ECB, which fiercely defends its independence. The Spanish government has previously hinted that it would like the ECB to reduce interest rates and that it was uncomfortable with the high euro-dollar exchange rate.
But rocketing world oil prices mean higher interest rates are more likely as the ECB's mandate is to control inflation. The United States Federal Reserve has to support economic growth as well. The ECB's task has been made more difficult by a divergence between the performance of southern European economies such as Spain and Germany, where growth is holding up despite the credit crunch.
Spain grew more quickly than the rest of the eurozone for a decade thanks to a debt-fuelled construction and housing boom. But now the financing has disappeared house prices are falling and building sites stopping work. Zapatero, a Socialist who won re-election in March, is also facing rising protests over fuel prices, with fishermen and truck drivers planning a strike from midnight on Sunday.