Several key European Central Bank officials voiced their ease over the outlook for euro-zone inflation yesterday, further raising the prospects of an interest rate cut as early as next month.

Inflation in the euro zone was at an acceptable level, ECB board member Mr Eugenio Domingo Solans said, even though in October it rose to 2.2 per cent, rising further above the ECB's 2 per cent tolerance ceiling. "We have inflation right now of 2.2 per cent, somewhat higher than the definition of stability, but which can be considered acceptable. Therefore we are fulfilling our priority goal, of price stability," said Mr Domingo Solans.

The ECB left its benchmark interest rate unchanged at 3.25 per cent last week, but in an unprecedented show of frankness admitted it had been discussing a rate cut, strongly boosting markets expectations of cheaper cash in December.

Two other council members also sounded relaxed about the inflation outlook. Mr Klaus Liebscher, governor of the Austrian central bank, expected inflation to decline to below the ECB's 2 per cent ceiling during 2003 and 2004. And Germany's Mr Ernst Welteke said weak economic growth and a stronger euro were likely to dampen inflation.

Analysts said the comments had strengthened their opinion that lower borrowing costs were imminent and some said though the arguments the bank was now using were unchanged, the tone was more dovish - in favour of lower rates.

"It is the first time I have heard somebody from the ECB saying even a rate above 2 per cent is acceptable. That is the first time I heard such a thing and it means there is growing pressure (in the ECB's governing council to lower rates)," said Mr José-Luis Alzola, an economist at SSSB.

Spain's Mr Solans said the ECB would "devote a lot of time"to discussing interest rates at its December 5th meeting, and that new forecasts on growth and inflation that the bank is due to publish next month would be a "fundamental element" in the decision.