Brussels, 27/05/2003 (Agence Europe) - With reassuring remarks on inflation and mentioning the weak economic activity in the Euro zone, the Vice-President of the European Central Bank (ECB)), Lucas Papademos, opened the door, on Tuesday, to the next cut in interest rates, possibly even on 5 June during the next meeting of the ECB. Several governors of national central banks in the Euro zone hinted at this scenario in recent days, in particular the Dutchman Nout Mersch, the Spaniard Jaime Caruana, the German Ernst Welteke or the Luxembourg counterpart Yves Mersch. Certain members of the ECB directorate in Frankfurt, in particular its chief economist Otmar Issing and, to a lesser extent the President Wim Duisenberg, seemed at one point more reticent, but now appear to have aligned with their colleagues.
The pace of price rises will follow a downward curve in 2004, felt Mr Papademos in Frankfurt. We expect inflation to clearly fall below 2% next year and that it stabilises at this level, he stated. He admitted that deflation was more undesirable than a rate of inflation above 2%. However, according to him, such a danger is very low in the Euro zone as a whole and in each Member State in particular (a direct allusion to Germany, where recent statistics on prices are of concern to economists). At the same time the ECB Vice-President painted a mitigated picture of growth prospects that should only strengthen in 2004. For this year, prospects remain very low for the first half year and the recovery should be moderate during the last six months of the year, underlines Mr Papademos. For as much, the ECB has no intention of revising its 2003 growth forecasts, he indicated. The recent developments could suggest that growth would in fact be below 1%, commented Mr Papademos.