European Central Bank president Mr Wim Duisenberg has restated the bank's concern about inflation but dampened expectations an interest rate rise is imminent by questioning the strength of euro zone recovery.
His remarks were seen by financial markets as largely a repeat of the ECB's inflation warning in its May monthly report.
However, the worry about the growth outlook cooled some of the speculation about a rise in ECB interest rates as soon as its next policy meeting on June 6th.
"There are still uncertainties on the strength of the economic recovery and they, in turn, imply the existence of uncertainties regarding the inflation outlook - and these uncertainties have not diminished since the Governing Council meeting on May 2nd," Mr Duisenberg said.
He told the European Parliament's Economic and Monetary Affairs Committee that the ECB's benchmark interest rate, now at 3.25 per cent, was appropriate for now and repeated that the ECB would be vigilant about factors driving inflation.
"There is no cause or reason for alarm. We still do think that the monetary policy stance that we have is appropriate for the time being," he said.
He said it was now certain that the trough in economic activity had been reached at the end of last year and that a gradual recovery was under way.
Still, uncertainties about the strength of the upswing remained, mostly related to high oil prices and the recovery of consumption in the region.