European Central Bank (ECB) President, Mr Wim Duisenberg, has declined to rule out further reductions in interest rates if prices remained stable but warned that euro-zone governments are scarcely cutting public deficits.

In an interview to be published in the weekly newspaper Die Zeit tomorrow, Mr Duisenberg said that although interest rates were currently at historically low levels, if price stability were attained, "we must try to get interest rates as low as possible".

He said that "that is the maximum contribution" monetary policy can make to growth. But the "margins (for manoeuvre) are very narrow, because long-term interest rates are already at a historically low level.

"Monetary policy can't do a lot more," the ECB president said. "Interest rates are at a historical low and have only a limited effect on investment anyway.

"It is up to others to improve the conditions for growth and employment so that more is invested," he added.

Mr Duisenberg said that one of the ECB's biggest concerns at present was the fact that public sector deficits "are hardly being cut" at all.

In the euro area as a whole, the deficit ratio would be cut by 0.30.4 percentage point and by only 0.1 percentage point next year, Mr Duisenberg said.

In contrast, between 1993 and 1997 the ratio of public sector deficits to gross domestic product declined by an average one percentage point each year, he said.

"But the stability pact is very clear that budgets must either be balanced or in surplus. That goal is moving further and further away on the horizon," Mr Duisenberg said.