European Central Bank chief economist Otmar Issing said Wednesday that inflation in the eurozone was higher than the bank would like it to be, adding that the ECB was monitoring inflation developments with concern.

"It is higher than we would consider desirable," Issing told the Frankfurter Allgemeine Zeitung in an interview. "We are observing this development with vigilance and not without concern."

He said inflation risks have Increased.

"Some threatening clouds have appeared on the horizon, not least in the form of the strong oil price rise," Issing said, adding it is important higher fuel costs do not push wages higher.

He said indirect tax increases and excess liquidity in the euro zone also present inflationary risks.

Eurozone inflation rose to 2.5 percent in October, according to provisional data. But Issing said the ECB remains confident that inflation will fall below 2.0 percent over the medium term.

"If all these factors remain under control, one can be confident that in the medium term, the inflation rate will fall under 2.0 percent," he said.

Issing said the risks to economic growth in the eurozone have also increased as a result of high oil prices, but rejected the suggestion that a return to economic stagnation is possible. _ -