MILAN, Dec 30: The European Central Bank could raise rates again to give itself room to keep inflation under control, the OECD's chief economist said in an interview published on Saturday, echoing comments he made on Dec 15.

It's possible the European Central Bank (ECB) will tighten

credit conditions a little more to secure itself a certain safety margin to keep the high cost of living at bay, Jean-Philippe Cotis said in an interview in Borsa&Finanza.

Cotis told a conference in Brussels on Dec. 15 he expected moderate ECB tightening over the next two years, maybe to the tune of 50 basis points.

He told Borsa&Finanza that he was not particularly worried about inflation, adding that the addition of new members from east Europe to the European Union was deflationary. Romania and Bulgaria join the EU on Jan. 1.

Cotis said growth in Europe was currently estimated at around two per cent per year but added that an ageing population and a fall in employment levels was destined to reduce that.

We need structural reforms, otherwise the future remains unclear, he said, while maintaining he expected a couple of years above the average” for the European economy.The Organisation for Economic Cooperation and Development (OECD) expects the euro zone economy to grow by 2.2 per cent in 2007 and 2.3 per cent in 2008.

Cotis said Germany's planned hike in value added tax (VAT) and Italy's proposed budget cuts for 2007 could make growth last longer, albeit at a slower pace.

Take Germany for example: increasing the pressure on consumers cools the dynamism at bit, but at the same time, improving the accounts puts Berlin in a position where it can give some oxygen to the economy wherever it's needed.” Germany plans to raise VAT to 19 per cent from 16 per cent from Jan. 1, 2007. —Reuters