The European Central Bank (ECB) should use the same criteria as usual when it takes its interest rate decisions and not allow itself to be pressurised, EU Monetary Affairs Commissioner Joaquin Almunia said yesterday.

"I hope the bank will take its decisions with the same proper judgment as in the past and certainly we should demand that everyone allows the bank to take its decisions with complete independence, without pressure. No one should pressure the bank," he said at a lunch in Madrid.

"If a central bank, which has a mandate for independence, is feeling pressured, it will tend to overreact. And it's best not to force it to demonstrate its independence," he said.

Mr Almunia's comments came after a bout of public calls by European politicians for the ECB to take recent market turbulence into account when it takes its next rate decision on Thursday. Analysts interpreted this as a call for the bank not to boost rates.

Economists are not expecting a hike, believing that rates will be kept on hold at 4 per cent due to ongoing money market turmoil, even though economic fundamentals would otherwise make it raise rates. But commentators readily admit that this is the trickiest call in the ECB's current cycle of interest rate hikes, as the bank seeks to keep the banking system running smoothly without losing sight of longer-term inflation dangers.

"Given ongoing tension in money markets we don't see the ECB putting extra oil on the fire. But they will keep the tightening bias. They are still concerned about inflation," said Marco Kramer, co-head of European economics at UniCredit. Nonetheless, economists still expect the ECB to raise rates by the end of the year, unlike the US Federal Reserve.

Economic fundamentals have not changed in the euro zone. Most economists still expect the euro-zone economy to grow healthily this year and next, and do not see a major impact from the US subprime mortgage crisis.

Instead it is the unexpected exposure of two German banks to these subprime mortgages that has made banks deeply reluctant to lend to each other, and forced the ECB to issue emergency loans to keep the financial system running. - ( Reuters )