Bundesbank vice-president Mr Juergen Stark said yesterday that interest rates in the euro zone were not an obstacle to economic recovery but growth would remain weak, while inflation would come down.

"Monetary policy in the euro zone, and even more in the United States, is everything but restrictive," Mr Stark said in a speech that he gave at a Bundesbank reception.

Mr Stark is not a member of the Governing Council of the European Central Bank, which is widely predicted to hold interest rates steady at its next policy meeting this Thursday.

He also said economic growth in the euro zone would be between 1.5 per cent and 2 per cent this year, which would make it one of the slowest growing regions in the world.

Germany, where growth might be even below the government's one per cent forecast for 2003, posed a problem to a euro zone recovery and much depended on how swiftly politicians could solve the country's structural problems.

"In Germany, we find ourselves in a structural growth crisis, aggravated by a lack of confidence," Mr Stark said.