Greece is preparing to revalue the drachma against the euro, a move that will allow it to slash interest rates and complete a long process of economic catch-up with its European partners.

Some analysts said a meeting in Brussels today to realign the drachma's central parity with the euro would lead to aggressive interest rate cuts from the Bank of Greece, although a senior bank official scotched the idea of immediate action.

"It (rate cuts) will be some time later . . . We are not going to cut rates on Monday," the official told Reuters.

But the official said a revaluation would provide scope for future interest rate cuts - the main catalyst for today's likely revaluation.

Greece needs to revalue the drachma to the euro to allow it to cut as many as seven percentage points off its key short-term rates to converge with euro zone levels before joining economic and monetary union (EMU) on January 1st, 2001.