No euro for Lithuania: too high inflation

The European Commission rejects to allow Lithuania to adopt the euro, saying its inflation is too high. But Parliament criticizes this decision, saying EU executive for interpreting the rules too strictly. But the European Parliament said the rules should not be pinned to the three countries with the lowest inflation, but the three with an inflation rate nearest the European Central Bank's target inflation rate of "below, but close to 2 percent." No more than 1.5 percent higher than that target would be around 3.4 percent.

To adopt the euro, a candidate country's average yearly inflation must be no more than 1.5 percent higher than that of the three best performers in the EU. This would be 2.6 percent. Lithuania 's April inflation was 2.7 percent.

While European Commission spokeswoman Amelia Torres said the commission stood "ready to explain" itself to lawmakers, it will stand by its decision. She said lawyers had approved commission calculations.

In addition, she said the most important question was about the "sustainability" of Lithuania 's exchange rate. The commission believes Lithuanian prices will keep rising in coming months, not fall back as required to adopt the euro, reports the AP.