FRANKFURT (MktNews) - The European Central Bank may decide to leave official interest rates unchanged this year, or may see the need to cut them only by 25 basis points, if eurozone growth remains close to 2.5%. A growth rate of this size would be a disappointment after recent expectations, but still within the bounds of the trend growth rate identified by the ECB and so a "normal year" for the eurozone economy. Clearly, how much eurozone growth slows this year is the major unanswered question facing the ECB. Still, ECB President Wim Duisenberg again played down concerns at his press conference Thursday, predicting that growth will be only a bit below 3% this year and next. The impact on the eurozone of a U.S. hard landing will not be very severe, he argued, since the trade dependence of the eurozone is relatively low. And eurozone inflation risks remain, he said, although they have declined somewhat due to the stronger euro and lower oil prices. A crucial question at this stage is how much European consumer confidence, and so consumer spending, will be affected by a marked slowdown in the U.S. Although this is an open question, there are several reasons to believe that the effect will not be too pronounced. First, lower taxes, higher disposable incomes due to improving terms of trade, and lower unemployment should help boost consumer spending. Note that unemployment is very much a lagging indicator in the eurozone and should be influenced to some extent by the good economy in late 2000. In addition, share prices still play a much smaller role for the disposable income and for the mood of Europeans than for Americans. Furthermore, even a recession in the U.S. would have some positive effect on the eurozone economy by reducing oil prices and boosting the euro's exchange rate. Of course the manufacturing sector would be hurt by a stronger euro and falling foreign demand. But lower oil prices and the stronger euro would help the consumer by making imports cheaper and help businesses by reducing their input costs. In addition, a sharp U.S. growth slowdown could lead to a reversal of capital flows which had much to do with high yields in the U.S. corporate sector and the weakening euro. This could make it easier and cheaper for eurozone companies to raise capital and increase investment. Of course there is a risk that consumer confidence will drop considerably in reaction to the uncertainties in connection with the U.S. economy. In this case the scenario would be quite different and decisive rate cuts at some point would likely become necessary. But if consumer confidence holds up despite a hard landing in the U.S., the eurozone economy is still likely to grow near 2.5%, perhaps a bit below, this year. As argued above, this does not necessarily push the ECB toward a decisive rate cut this year, as it would be seen more as a normalization of growth rather than a crisis. The ECB may decide to cut by 25 basis points at some point to counter a too rapid appreciation of the euro or to pacify critics on both sides of the Atlantic. But the ECB will be cautious with policy because it cannot risk failing to meet its 2% inflation limit for the second consecutive year, especially the year prior to the introduction of euro coins and notes. The notes and coins changeover will be a critical moment for the ECB, especially in Germany. Most Germans believe that their beloved DM will only disappear when the euro notes and coins take over. Therefore politicians and central bankers are eager to avoid a new debate on the euro's benefits at the end of this year. The best way to avoid this is for the ECB to bring inflation down below its limit.