Mr Trichet has presided over five ECB rate rises in the past year

Jean-Claude Trichet said that while the global economy was set for "dynamic growth" in 2007, there was "no room for complacency" over price rises.

He said central banks must be vigilant over inflation, despite oil prices coming down from highs seen in July.

Central banks have hiked interest rates in a bid to keep inflation in check.

'Avoid euphoria'

Speaking in Australia after the G10 meeting of central bankers from leading industrialised nations, Mr Trichet said that while there had been a period of sustained global growth, it was important to "avoid any euphoria" and to continue to set interest rates at a level which ensured stable prices.

The ECB has raised its own interest rate by a quarter of a percentage point on five occasions since December 2005. It now stands at 3.25% and is strongly tipped to rise to 3.5% next month.

Meanwhile, the Bank of England's interest rate was raised to 5% from 4.75% earlier this month while the US and Japan have also increased their rates this year.

Mr Trichet added:

"There are risks that must be taken into account if we want this dynamic growth to continue and be sustainable," he said.

"We have certainly the risk that inflation could create an environment which would not permit sustainable growth."