February 23, 2003	Sunday	Zul Hijjah 21, 1423

PARIS, Feb 22: The European Central Bank won’t hesitate to cut interest rates if economic uncertainty persists and euro-zone inflation remains under control, ECB President Wim Duisenberg said on Saturday at a Group of Seven meeting here.

We won’t hesitate to act, Duisenberg told reporters at the G7 gathering of finance ministers and central bank governors.

The ECB left its main refinancing rate at 2.75 per cent when it last met February 6 in Frankfurt.

Duisenberg said Saturday the bank’s data suggests there was no prospect of posting growth of 2.0-2.5 per cent in the euro zone this year.

Further turbulence on the oil market will probably have a negative impact on growth in the 12-nation euro zone, in part by adversely affecting consumer confidence, he said.

Nikos Christodoulakis, president of the Eurogroup of finance ministers from the 12-nation zone, said: Our economy is experiencing a worrisome slowdown, with uncertainty, heightened by fear of war with Iraq, as the key element holding back growth.

But Duisenberg noted that a weaker outlook should contribute to lower inflationary pressure which could allow the bank to cut interest rates.

European Central Bank President Wim Duisenberg said on Saturday that economic uncertainties had increased recently and the ECB would not hestitate to act if it gets signs that the European economy was weakening further.

Briefing the media half way through the meeting of Group of Seven finance ministers in Paris, Duisenberg also said the weaker growth outlook would help lower inflation.

Whatever the events in this world of uncertainty, if we get new information or make new assessments about the medium term outlook for price stability or the economy, we will not hestitate to act, Duisenberg told reporters.

The ECB chief added, however, that the central bank’s views were independent of turbulent world events.

If anything, uncertainties about future developments have increased recently and the prospects of an economic recovery to potential growth this year is not supported by the latest information, he said.

Duisenberg said this weaker outlook should contribute to lower inflation. As you know price stability is our aim.—AFP/Reuters