BRUSSELS, Jan 24: EU finance ministers expressed guarded confidence on Tuesday about the prospect of accelerating economic growth this year, but resurgent oil prices kept them on edge about probable interest rate hikes in the euro zone.

Ministers from the 25-nation European Union met in Brussels a day after their colleagues from the inner circle of 12 euro zone countries discussed the rate outlook with European Central Bank chief Jean-Claude Trichet.

It’s going quite well in Europe,” Dutch Finance Minister Gerrit Zalm told reporters, while noting that oil prices and huge US trade and budget deficits were matters of continued concern.

I still see a moderate pick-up in the economy, which will be good, Austria’s Karl-Heinz Grasser said after EU Economic and Monetary Affairs Commissioner Joaquin Almunia said he hoped his own growth forecasts would end up being beaten this year.

On Monday evening, finance ministers from euro zone nations said they believed the economy was indeed picking up, but that inflation was not the serious risk that the ECB has been holding up as justification for raising rates.

But the politicians seemed more muted in their appeals after a chastening experience late last year when they strongly urged the ECB to hold fire, only to see it raise credit costs for the first time in five years on Dec. 1, to 2.25 per cent.

We of course raised the matter of monetary policy with the president of the bank (Trichet) to convey our point of view to him, but I do not think it’s useful to prolong a debate that was too public in recent months, Jean-Claude Juncker, chairman of the Eurogroup club of finance ministers, told a news conference.

Austria’s Grasser, a more overt critic previously, said much the same. Complicating the debate over rates, oil prices have been back on the rise in recent days, feeding politicians’ fears of damage to business and central banks’ fears of price inflation.

And the euro surged versus the dollar, a worry for European exporters.

Trichet is under pressure from his own camp to resist any interference, and financial markets expect the ECB to raise rates by a quarter point in March to 2.50 per cent.

Almunia said high oil prices were still a risk but he was hopeful about an economy that he recently forecast would grow 1.9 per cent or perhaps better this year after 1.3 in 2005.—Reuters