The European Central Bank is to cut its growth forecasts for the euro zone, chief economist Otmar Issing, said in Frankfurt on Thursday night.
The bank forecast in December last year that gross domestic product (GDP) was set to grow by 3.2% to 3.6% in 2000, after taking into account the effects of inflation.
'The climate is deteriorating. There's absolutely no doubt that the international climate has significantly worsened since we published our forecasts last December,' Issing said.
But he also dismissed as grotesque market rumours that the council of ECB central bank governors had held an emergency meeting during the day. 'The world economy with the developments in the US and in Japan is in a much poorer state,' said Issing. That was why ECB forecasts had to be revised downwards, he added.
The figures published last December by the ECB were their first ever economic forecasts for growth and inflation in the euro zone. At the time, the figures suggested that interest rates should be maintained.
The revised forecast could open the way to a possible cut in interest rates. For weeks, the ECB has been under pressure to follow other central banks around the world and lighten interest rates.
It is not a foregone conclusion however. When it released its December figures, the ECB stressed that forecasts were based on hypothetical conditions, under which short-term and long-term interest rates remain unchanged over the period under review.
'For that reason, the economic forecasts are not necessarily the best tools for predicting future activity, especially over the long term, to the extent that monetary policy will always tend to contain future threats to price stability,' it warned at the time.
The ECB's main interest rate is currently set at 4.75%.
