ECB dampens interest rate cut speculation

The European Central Bank has dampened speculation that it could cut interest rates to stave off the threat of recession.

It said current interest rates in the euro-zone are 'appropriate' to maintain price stability for the time being.

Last week, the Eurobank held its main interest rate at 4.5%.

President Wim Duisenberg has made it clear that the central bank, which controls interest rates for the 12 nations that form the euro-zone, will not move on rates until inflation slows.

In its August report, the ECB said the real GDP growth in the first-half of 2001 was expected to have been below earlier predictions.

It said there was increased uncertainty surrounding economic growth in the euro-zone in the second half of 2001.

This is due to the economic slowdown elsewhere and changes in consumer confidence.

The ECB said future wage negotiations could have an impact on the inflation rate.