"There is a need to reduce labour market rigidities, for they restrict wage differentiation and flexibility."

"Progress towards greater contractual flexibility remains slow in several euro area countries," Trichet emphasized.

Trichet also highlighted that second round inflation risks existed from rising energy and food prices.

Trichet added that euro zone financial integration was essential and that there was a worldwide consensus for price stability.

By Todd Wailoo, This email address is being protected from spam bots, you need Javascript enabled to view it