European Central Bank president Mr Wim Duisenberg stood firm yesterday against pressure to rush into cutting interest rates, saying the bank remained committed to an inflation target of 2 per cent.

Mr Duisenberg adopted a hardline position in the wake of a foiled effort by the Belgian Finance Minister, Mr Didier Reynders, to pressure the Frankfurt-based bank into cutting rates.

Currently, the ECB's monetary policy is based on its belief that euro-zone inflation will fall below 2 per cent next year: "If there are developments, that would change the assessment," declared the Dutch central banker.

Asked if that meant that inflation would have to fall even lower, he replied: "Further improvements mean further improvements of the prospects that are already in place."

The Belgians had wanted the EU leaders' meeting in Ghent earlier yesterday to note that "reduced inflation should provide room for monetary authorities to take further decisive action".

However, the proposed text caused major difficulties when in the morning it was put before EU ambassadors in Brussels, who believed it interfered with the ECB's independence. The Government opposed the Belgian proposal because it believed that such a move would compromise the ECB's independence and confuse financial markets.

ECB intervention helped force the draft change, Mr Duisenberg implied strongly: "We were asked to give our opinion. We gave our opinion. I am very pleased by the text that is there now."

His remarks came during a joint press conference with the European Monetary Affairs Commissioner, Mr Pedro Solbes and Mr Reynders, who denied that there was any division among them.

Though the majority of EU countries shied away from a public attempt to direct the ECB, they do want interest rates to fall to help stimulate some economic activity.

"We believe there is margin to manoeuvre a monetary policy that is more favourable to growth and employment," Portuguese Prime Minister Mr Antonio Guterres said as he arrived at the Ghent meeting.

The ECB's interest rate now stands at 3.75 per cent, following a 0.5 per cent cut in the aftermath of the September 11th attacks on the World Trade Centre and the Pentagon.

Average inflation inside the 12-strong euro zone fell last month to 2.5 per cent from 2.7 per cent in August - adding to the belief that stagnant growth was now the EU's main challenge.