Brussels, 03/12/2002 (Agence Europe) - Noting that inflationary tendencies in the euro zone were waning and that the risks weighing on growth persisted, the president of the European Central Bank (ECB), Wim Duisenberg opened the way, Tuesday, to a possible cut in the ECB's interest rates. At his traditional hearing before the Parliamentary Committee on Economic and Monetary Affairs, Mr. Duisenberg said that the fact of not having cut the rates in November "must in no way be interpreted as a punishment for governments that have not so far honoured their medium-term budgetary commitments". Duisenberg said that the ECB would continue to "follow the evolution of the risks weighing on growth and their impact on medium-term inflationary tensions", and that, since the last meeting of the Governing Council, "the impression that inflationary tensions were waning has strengthened, whereas the risks of a slowdown in growth have not gone away". The inflation rate in the countries of the euro zone should fall below 2% in the course of 2003, he said.
In answer to a question by Piia-Noora Kauppi (EPP-ED) on the budgetary situation in the euro zone, Mr. Duisenberg declared himself to be "very pleased" that the European Commission should have had the "courage" to initiate a procedure against Germany and France to penalise them for sliding off track as far as their public finances were concerned, and "very pleased" that, during the meeting of the Eurogroup, the German Government should have agreed to the launch of the procedure and undertaken to "act in consequence" to reduce its deficit. Furthermore, Duisenberg declared in his introductory address that the ECB had welcomed the recent Commission proposals on strengthening the co-ordination of economic policies. According to him, these proposals are a "good point of departure for the return of confidence" in the rules of budgetary policy. Speaking to Othmar Karas, Austrian, EPP-ED), Mr. Duisenberg warned that the debate on the Stability Pact "has only just begun". According to him, the Commission's proposals do not seek to "alter the fundamental rules of the Pact, but to introduce a stronger interpretation of its provisions". Questioned by Robert Goeppels (Luxembourg, PES) on the reasons that justified maintaining such high interest rates in Europe (3.25%) compared to those in the United States (1.25%) despite similar performances in public finances, Duisenberg notably remarked that the American deficit was close to 5% of GDP, "which over the long run is not sustainable". He then explained to Benedetto Della Vedova (Bonino list) that the fear of deflation in one or several countries of the euro zone was not justified. Inflation rates vary depending on Member States but "looking over the longer term, only in the year 2000 did the differentials widen". Mr. Duisenberg took as example the inflation differential between Germany and Spain, or 1.1% and 3.8%, and thought there was nothing exceptional there.