The president of the European Central Bank (ECB), Mr Jean-Claude Trichet, defended the ECB against charges of inflexibility yesterday and said it had little room for manoeuvre.
"There is no excessive rigidity in monetary policy" pursued by the bank, Mr Trichet said.
"The fact that we have anticipated, since the creation of the euro, that inflation would vary between 1.7 and 1.9 per cent - that is less than 2 per cent but close to 2 per cent - seems to me to show that we do not have an extraordinary amount of room [for manoeuvre\]," Mr Trichet said.
The ECB chief also said interest rates in the 12-nation euro zone were "exceptionally favourable", without specifying whether he was referring to short- or long-term rates.
The bank left its benchmark interest rate unchanged at 2.0 per cent at the last meeting of its Governing Council.
The Frankfurt-based bank is under intense pressure from politicians wanting a cut in rates to boost growth, amid fears that the euro's strength against the dollar is hurting exports.
On the level of the euro against the dollar, Mr Trichet said he had no comment to make other than that it was very close to its introduction level.
Asked whether central bankers should use their monetary policy to influence exchange rates, he said bankers and other players had to accept the world was one of floating exchange rates.
