European Central Bank (ECB) president Wim Duisenberg today said the ECB's current monetary policy stance remained consistent with the preservation of price stability over the medium term. He also insisted it was conducive to economic growth. Speaking at a news conference after the ECB decided to keep its key interest rate unchanged at 2.5pc, Duisenberg said that with the end of the war in Iraq, important downside risks to the economic recovery have diminished.
"We continue to expect a gradual strengthening of real GDP growth to start later in 2003 and to gather more pace in the course of next year," he said. "Factors supporting this outlook are an expected recovery of global demand, the prospect of falling inflation benefiting real disposable income growth, and the low level of interest rates. Moreover, the recent unwinding of uncertainties associated with geopolitical tensions should contribute to an economic recovery," he added. However, analysts expect a cut in rates at the ECB's next meeting following a raft of disappointing economic indicators from the eurozone, most notably Germany, which looks to be on the brink of recession. ///www.fxcentre.com