European Central Bank chief economist Mr Otmar Issing said that current policy was not restrictive but that there was no risk of ECB stepping too hard on the monetary brakes.
"According to all criteria, our monetary policy cannot be described as restrictive," Mr Issing said in an interview to be published today.
"There is certainly no risk of an ECB over-reaction," he added, stressing that the ECB always acts after careful consideration.
Asked about the central bank's inflation concerns, Mr Issing said there is no reason to "ring the alarm," but the ECB was worried about risks to price stability and had stressed this concern in the bank's August monthly report.
The central banker repeated a comment from that report that the trend of consumer price inflation in the coming months would be largely determined by the combined effect of the weak euro and oil prices.
Mr Issing added that the August report could be seen as giving verbal support to the euro.
Asked if the ECB should intervene, at least verbally, to support the euro, Mr Issing replied: "If you want, then our monthly report was, in a certain way, a verbal intervention in favour of a strong euro."
Mr Issing noted that the US economy had continued to surprise on the upside, keeping the dollar strong against the euro, but said that one day the surprise effect would tail off or be reversed.
The introduction of the euro could have led to a certain overstating of M3 money supply growth, but he reiterated that liquidity conditions in the euro area remained ample.
Still, the ECB would carefully review structural changes in the European economy - such as those stemming from technology improvements, tax reforms, and deregulation - when it reviews its reference value for monetary growth in December.
"We will carefully examine whether there is evidence that the growth potential [of the euro zone] has increased," he said.
Asked if he shared the EU Commission's forecast for eurozone growth of 3.4 per cent in 2000 and 3.1 per cent in 2001, Mr Issing said the forecast was broadly within consensus and he saw no reason to differ.
