The European Central Bank sees no reason to cut its key interest rates on the basis of the current economic data, president Wim Duisenberg said this afternoon.
'We do not plan to change our monetary stance on the basis of the information that we have available today. What will happen in the future nobody knows," Duisenberg told journalists at a news conference in Frankfurt. Earlier today, the ECB held its key interest rates steady, as had been widely expected by most economists and central bank watchers.
The ECB chief said that he was confident the bank would achieve its goal of an inflation rate of less than 2% within the next few months. Furthermore, the ECB would be able to keep inflation below 2% for the year 2001 and even the year 2002, Duisenberg promised.
He added that the outlook for growth in the 12-country euro area 'remains positive' and area-wide growth will 'remain robust. 'There are no signs that the US slowdown is having a significant and lasting effect on the economic performance of the euro area,' he said.
His assessment appeared to coincide with those of other observers. The head of the the economics department of the Organisation for Economic Cooperation and Development, Ignazio Visco, said in Munich that the short-term outlook for Europe remained solid, despite the slowdown in the US economy.
'Slower growth in the US will obviously bear on the economic outlook in other major economic areas, nonetheless, the short-term outlook for Europe appears to remain solid,' Visco said.
The high level of business and consumer confidence, gains in employment, and tax cuts implemented in a number of euro-zone countries 'should underpin growth in domestic demand without stoking inflationary pressures' Visco said.
French finance minister Laurent Fabius also wrote in a newspaper article today that although the US slowdown could spark some turbulence for Europe, euro-zone growth would nevertheless reach the relatively robust rate of 3% this year.
'The slowdown in growth in the US will certainly have an effect on the economies of the euro-zone countries. But growth will nevertheless remain robust in the euro area and reach just under 3%,' he wrote in an article published in the business daily Handelsblatt.
Europe would therefore provide the most important contribution to stability and growth in the world economy, Fabius said. 'The beginning of 2001 marks a change in the economic landscape. For the first time, Europe is the area posting the most significant growth in the world.'
Fabius' comments were published on the same day as German fourth-quarter gross domestic product, which showed growth in the biggest economy in the euro zone slowed to just 0.2% at the end of last year.
