Inflation is still a major global risk and central banks around the world must remain very, very alert on price risks, European Central Bank President JeanClaude Trichet said on January, 27 2007. We make an assumption that central banks around the world are doing their jobs. Its true that we are credible in this domain, Trichet told a panel discussion at the World Economic Forum meeting in Davos. We have to remain very, very alert. That (inflation) is a major global risk, he said.

Trichet also warned of risks to the world from failure in the Doha round of trade talks, potential changes to the oil price and a disorderly unwinding of global economic imbalances. Asked about currencies, Trichet said he would stick to the last statement made by the Group of Seven industrialized nations which has said excessive volatility and disorderly moves in exchange rates are unwelcome.

US Deputy Treasury Secretary Robert Kimmit said the outlook for the worlds largest economy was positive after a significant kickup in the fourth quarter. We will have solid growth in 2007, with … moderate inflation, he told the panel, adding that softness in the US housing market, which hampered growth last year, was now showing signs of stabilizing.

Kimmit also warned that there was increasing protectionism in the world and urged countries to be open to investment. A top priority is (a) global trade agreement. We must have political will. We are positive about that, he said.