The race to succeed Mr Hans Tietmeyer, president of the Bundesbank, burst into the open yesterday. As the names of potential candidates became public, there were signs of tensions within the Bundesbank, which is struggling to fend off pressure from Germany's new centre-left government for lower interest rates.

Mr Hans Welteke, president of the state central bank of Hesse, is widely considered to be the frontrunner to succeed Mr Tietmeyer. But speculation grew yesterday that Mr Oskar Lafontaine, German Finance Minister, could impose Mr Heiner Flassbeck, state secretary at the finance ministry and a fierce Bundesbank critic.

Mr Lafontaine is expected to press his case for lower interest rates at a meeting of the Bundesbank's general council in Frankfurt today. Analysts do not expect the Bundesbank to change rates, but divisions within Germany's central bank are making it more difficult to present a united front.

Mr Lafontaine gained support yesterday from Mr Hans-Jurgen Krupp, president of the central bank of three northern German states and a Bundesbank council member. Mr Krupp said monetary policy should shift emphasis towards supporting economic growth and employment at a time when price stability had been achieved.

"Monetary policy has the legal obligation to support the economic policy of the federal German government and the European community," he told a newspaper. Other Bundesbank officials have indicated that interest rates could fall further.

Their position is at odds with the views of Mr Tietmeyer, but he is due to retire next summer. Several members of the Bundesbank's governing council are candidates for the top central bank job, which for the past 40 years has embodied Germany's commitment to price stability.

The job has added importance because the Bundesbank president automatically becomes a member of the European Central Bank's (ECB) governing council, which will set interest rates for the 11 countries joining the euro zone from January 1st.

As German Finance Minister, Mr Lafontaine will be in a powerful position to influence the Bundesbank nomination and, indirectly, the ECB's policy.

German Chancellor Mr Gerhard Schroder made clear at a cabinet meeting yesterday that his government believed it was legitimate to debate the role monetary policy could play in cutting unemployment.