FRANKFURT, Oct 23 - European Central Bank policymakers on Thursday were markedly upbeat that the euro zone is on the brink of recovery as they entered their final policy meeting under the leadership of Wim Duisenberg. The makings of a rebound allow Duisenberg to hand over an economy on the mend to Jean-Claude Trichet at the end of the month, giving the next ECB president some leeway before he must decide on changing interest rates, now at record lows of 2.00 percent. ECB policymakers usually do not consider monetary policy at this, their second Governing Council meeting of the month, and no announcement is expected at 1230 GMT. Their optimistic tone on entering the ECB meeting sent a clear message they are confident a recovery is taking hold and no further rate cuts are on the cards for now. "There are lots of good signs of a slow recovery emerging. It's the pace and depth which we will have to wait and see," John Hurley, Ireland's central bank governor, told reporters on entering the meeting. "The feelings are certainly better since the summer. The publication of the Belgian leading indicator is confirmation of the fact that the feelings are better," said Belgium central bank governor Guy Quaden. Duisenberg likewise said a day earlier that he was "very confident" about recovery, adding that growth "will go ever faster in the course of next year and in the year thereafter."
At the end of 2004, "we will be at our potential rate of growth, which is about 2.5 percent at an annual rate," he told Bloomberg news on Wednesday evening as he left a farewell party for ECB staff. Given this scenario, Dutch central bank Governor Nout Wellink said on Thursday that interest rates in the 12-nation euro region are sufficiently low to support economic recovery. "Yes, they are low enough," Wellink said as he entered the ECB building for the Governing Council meeting. In fact, so confident are markets that economic recovery is firmly in place that financial futures instruments now are pricing a better than 50 percent chance for a rate increase by year end. Euribor three-month futures were trading at 97.845 on Thursday, implying an interest rate of about 2.15 percent by December. However, most economists expect the central bank to remain on hold well into 2004 until the strength of recovery after stagnation earlier this year can be fully gauged.//