The European Central Bank (ECB) kept interest rates unchanged yesterday, brushing aside suggestions it should do more to shield the euro zone from recession and voicing confidence that growth will pick up next year.

ECB president Mr Wim Duisenberg said the bank was convinced, after slashing rates his year by 150 basis points, monetary policy did not stand in the way of recovery. "Financing conditions in the euro area are very favourable," he told a news conference after the bank's last scheduled rate-setting meeting for this year.

Mr Duisenberg acknowledged that growth in the euro zone, which many economists see as on the brink of recession, would remain sluggish early next year, but predicted an upturn by mid-2002.