DAVOS, Swizerland - (AFX) - Bundesbank president Ernst Welteke said that the recent decline in euro zone infaltion is not a 'clear indication' that the ECB will cut interest rates.
"The risks to price stability have become smaller with the appreciation of the euro and the fall in the oil price, but this does not mean that we have to move in the other direction with monetary policy", he told reporters on the sidelines of a seminar here.
"Our position (for interest rates) is on hold... the fall in inflation is not a clear indication for a move in the other direction."
Welteke said that the ECB feels under no pressure to act in response to the Fed's recent 50 basis points rate cut and demands from ECB observers for a cut by the ECB.
He added that the ECB also feels under no political pressure from G7 nations to make a move downwards.
"An independent central bank cannot act under pressure, it cannot be persuaded to act in certain direction" he said.
Welteke added that although prospects for growth in the euro zone remain robust, a slowdown in the U.S. will not "go by without trace in Europe".
He said that predicted growth rates in Europe have largely been corrected downwards, but he said that the German government's prediction of 2.75 pct GDP growth in Germany in 2001 is "achievable but ambitious".
He said that Germany is set to reap the benefit from moderate wage agreements for 2001 and should get a boost from the forthcoming tax reform.