European Central Bank President Mr Wim Duisenberg said today that ECB interest rates were appropriate but that there was still uncertainty about when and how the euro zone economy would rebound.
"The economic situation is developing in line with the forward-looking interest rate decisions taken last year and [the ECB] considers the current level of ECB interest rates to be appropriate," Mr Duisenberg told the European Parliament's economic and monetary committee.
He also said there had been signs of a stabilisation in outlook for world growth and that a gradual recovery in the euro zone was expected in the course of the year.
"However, uncertainty remains high and some recently released data still provide mixed signals and do not yet point firmly to an imminent acceleration in economic activity," he added.
Mr Duisenberg said there had been little change to the ECB's analysis of inflation prospects since December and repeated that inflation pressures were unlikely in the current economic environment.
He warned that year-on-year inflation rates might be erratic at the start of 2002, however, due to statistical effects from inflation developments early last year.
For this reason, the possibility of short-lived upward movement in the annual rate of inflation cannot be ruled out. This should not however be a cause for concern, he said.
Statistical effects would also help to push the inflation rate down again later in the spring, he said, adding that this also should not signal a change in the longer-term outlook for price stability .
Mr Duisenberg said that the changeover to euro cash at the start of this month had been smoother than the ECB had expected. "There had been some minor mishaps but this was only to be expected given the massive logistical task," he said.
"The euro's launch should have little, if any, impact on prices," he said.