Hopes of a cut in interest rates were fading last night in advance of today's meeting of the governing council of the European Central Bank (ECB).

A Reuters poll of economic analysts showed a slim majority predicting that the central bankers would leave interest rates unchanged today. But most market watchers believe that interest rates will be cut by at least 0.25 per cent within the next few weeks.

The central bankers have sent conflicting signals about their intentions in recent days, with the ECB's chief economist, Prof Otmar Issing, hinting broadly at an early rate cut, while Bundesbank president Mr Ernst Welteke suggested that such a move could be premature.

Slower growth in the euro zone and the receding threat of inflation are the main arguments in favour of cutting rates and the central bankers are under mounting pressure from Europe's politicians to make a move. The French Finance Minister, Mr Laurent Fabius, and his Austrian counterpart, Mr Karl-Heinz Grasser, have made no secret of their preference for an early rate cut.

But the chief economists of Germany's leading commercial banks have urged caution, arguing that the threat of inflation has not disappeared.