BRUSSELS (Thomson Financial) - EU finance ministers will discuss inflation, rising oil prices, and rating agencies at their meeting next Monday and Tuesday, with French Finance Minister Christine Lagarde in the chair for the first time after France took over the rotating Presidency of the 27-country bloc on July 1.
Faced with surging inflation and slowing growth against the backdrop of record oil prices, ministers will discuss how best to safeguard citizens' waning purchasing power.
The ECB raised its benchmark refinancing rate to 4.25 percent on Thursday and was strongly criticised by leading European trade unions who blasted the hike as 'dangerous' , warning it could harm European growth.
Ahead of the ECB's rate setting meeting, German Finance Minister Peer Steinbrueck also warned against the negative impact of a rate hike and urged the European Central Bank to consider the consequences of any rise in interest rates.
He added, however, that he would accept the ECB's decision.
'The ECB should take into account the consequences of an interest rate hike,' Steinbrueck said on the sidelines of a ceremony to mark 20 years since the creation of the Frankfurt Stock Exchange's Dax index on Monday.
Measures to increase the transparency of oil markets will also feature high on the agenda, as Lagarde outlines a timeframe to introduce specific measures.
The discussion will centre on whether to introduce a voluntary approach, where oil companies choose to disclose their stocks, or, alternatively, make it a legal obligation for them to do so.
But this month's meeting is not expected to provide any concrete answers.
'Each member state will say what it thinks, but there is no pressure to decide on Monday,' a source said.
Member states will discuss what conditions need to be in place to ensure transparency, a subject which is 'politically sensitive and industrially difficult', according to an official.
'Oil companies might consider that the level of stocks is part of their strategy. There is a need for a better understanding of price trends for petroleum and the role played by financial markets and speculative markets,' the official said.
Lagarde will also set deadlines for the introduction of measures to promote the use of energy efficient technologies which facilitate the bloc's shift away from a dependency on fossil fuels.
With regard to rating agencies, EU finance ministers will discuss the need to address concerns raised over their transparency.
Whilst they support the idea of better regulation, in particular by registering rating agencies, it remains unclear who they would be registered with as there is no EU-wide regulator, a source said.
In the United States, rating agencies are registered with the Securities and Exchange Commission which monitors the ratings of securities and issues strict guidelines.
EU Internal Markets Commissioner Charlie McCreevy plans to bring forward proposals for the new legislation in 'coming months'.
'We have now started work on the issues involved and I want to propose appropriate measures (to EU commissioners) in coming months,' McCreevy said in June, adding that the EU is in dialogue with peers in the United States, Russia, India and China on the international aspects of the regulation.
As a final point, European Union finance ministers will also give Slovakia the formal go-ahead to adopt the euro in January 2009, and will set the final exchange rate of the Slovak crown to the euro.
Slovakia will become the sixteenth member of the euro zone and the fourth to join from the group of ten countries that became EU members in 2004. antonia.vandevelde@thomsonreuters.com fr/ava/slj COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
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