ECB rates 'appropriate'

November 19, 2001 Posted: 1035 GMT

LONDON (CNN) -- European Central Bank Vice President Christian Noyer said on Monday the bank does not see the need for further interest rate cuts.

The euro fell to 88.01 U.S. cents from 88.65 cents in late New York trading on Friday, amid concerns economic growth may slow further in the 12-nation euro zone.

The ECB last cut interest rates by half a percent to 3.25  percent on November 8, its fourth cut this year. The U.S. Federal Reserve has culled rates 10 times this year to 2 percent, as it attempts to save the world's biggest economy from a bruising recession.

"For the foreseeable future, the level of interest rates seems to us to be appropriate," Noyer told a news conference in Seoul, South Korea.

"We use a number of items, indicators,... we deem (this level) to be appropriate given the information we have and we expect to receive in the coming weeks," said Noyer following a seminar on the euro.

The ECB's next rates decision is due on Thursday. The euro faces more tests later this week as key German business survey and third-quarter gross domestic product reports are released.

The ECB, which sets interest rates for the euro zone, has not been as active in cutting rates as many politicians and market watchers would have liked it to be, but the central bank has a mandate to control inflation below 2 percent.

Bundesbank President Ernst Welteke, who is a member of the ECB's rate setting council, said he expected the world economy to begin to recover in early 2002 and that the ECB's monetary policy was not hindering growth.

"Monetary policy is not standing in the way of a higher growth rate or higher employment," Welteke said when asked by German business newspaper Handelsblatt whether there was room for the ECB to cut interest rates further.

The German central banker said the attacks on the U.S. on September 11 had delayed the recovery in the world economy until early 2002. Welteke said economic stimulus measures for Germany, such as bringing forward planned tax reductions, would be counter-productive.

German third-quarter growth is likely to be zero or slightly positive, Welteke told journalists on the margins of a meeting of the International Monetary and Financial Committee at the weekend in Ottawa.

"In the Bundesbank we still assume that there was no major improvement in the third quarter, but no major deterioration either," he said. "That means zero, maybe slightly in the black... It could be just above zero."

--Reuters contributed to this report