European Central Bank President Mr Wim Duisenberg repeated today that current interest rates were appropriate to maintain euro zone price stability over the medium term.
He said that financing conditions in the euro zone remain favourable and repeated that he expected growth in the region to remain in line with the trend potential growth rate, defined by the ECB as between 2-2.5 per cent.
Speaking at a meeting of German’s Ifo economics institute he repeated the ECB's warnings that the temporary rise in inflation pressures in recent months must not be allowed to feed into higher wage demands.
Mr Duisenberg said the convergence of long-term interest rates to a relatively low level at the start of phase three of monetary union financial market participants gave a signal of confidence in the ECB.
"Inflation expectations since the start of monetary union have remained low," he said.