FRANKFURT. Sept 8: Europe's common currency flounders to fresh lows and oil looks stub-bornly anchored abo”e S 30 per barrel. Does it matter for jobs or growth? The answer is probably not. reports Reuters.

Economists said that growth forecasts for next year would be intact, or might be trimmed by a couple of tenths of a percentage point at worst, regardless of the outcome of Sunday's OPEC meeting and with the outlook for the euro remaining grim.

The main risk is what happens to inflation, particularly if the euro keeps falling, and what the European Central Bank does in response after it has already hiked interest rates six limes since November.

"You would be surprised, but the difference to growth would be almost nothing." said Holger Schmieding at Merrill Lynch.

Merrill reckons that (he export boost created by the softer currency would offset oil's Impact on domestic demand. As a result, Schemcldlng is leaving his forecast for 3.2 per cent GDP growth

next year intact.

Ollier economists warn that timelags between when oil prices hit real consumption and the weaker euro boosts exports could challenge this estimate. But the outcome would be still not be terribly dramatic.

Dresdner Kleinwort Benson economist Eckhard Schulte estimated that the fallout for GDP growth next year would be between 0.1 and 0.2 percentage points, because higher oil prices would hit real disposable Incomes and depress domestic demand.

"It Is true that to some extent oil and the euro would offset each other, but because of the timelags we’d probably have to revise down our 2001 growth forecasts to 2.75 per cent from 2.9 per cent," he said.

The main danger of persistently higher oil prices and a weak euro is the outlook for consumer Inflation.

CSFB estimates at an oil price at $35 per barrel for 15 months and the euro at $0.87 would lift headline Inflation to 2.3 per cent next year from Ils estimate of 2.2

percent in 2000.

The Fed has tolerated modestly higher inflation levels than in Europe because of Its confidence that new technology enhancement would allow the US economy to grow at a quicker pace than it had in the past without a boom leading to a bust.

Duisenberg has been far less forthright than Greenspan in crediting the new economy with lifting productivity and the ECB has been quick to act against inflation.

It has hiked Interest rates by two percentage points since last November to ward off higher prices stoked by the weak euro and a tripling in world oil prices.

The ECB Is pledged to maintain price stability over the medium term and Ernst Welteke, lx>ss of Germany’s Bundesbank, stressed on Thursday that this commitment was not wavering.

Euro zone Inflation is currently 2.4 per cent, significantly above a self-imposed ECB target of two per cent but a long way beneath the 3.5 per cent levels tolerated by the Fed in the pursuit of higher

US growth.

"Greenspan Is comfortable with 3.5 per cent but the ECB Is a new central bank. It has an explicit mandate and is likely to be more frazzled by inflation than the Fed," said Callow.

The ECB's central responsibility under European Union law Is to preserve price stability over the medium term a mandate it Is free to Interpret.

This means that it could decide to permit high inflation for a period of time in order to shelter the regional economy.

"Docs the ECB allow Inflation to slay above target for a couple of years, for the best of reasons like an external shock, or does it fight with monetary policy, with the risk of killing the current economic upswing," said Merrill's Schmeldlng.

An AFP report says: Soaring oil prices are expected to distract attention away from the formal agenda of the APEC finance minister's meeting in Brueni.