Bundesbank president Mr Ernst Welteke was reported today as saying the euro was clearly undervalued and that price pressures in the euro area were lessening.
Mr Welteke, a member of the European Central Bank's policymaking council, told German magazine
Focus Money
that money supply growth had been slowing since spring 2000.
The slight weakening of economic growth is lessening price pressures in the euro zone, Mr Welteke said.
The euro has weakened in recent weeks following a series of economic data showing the euro zone economy is slowing, and amid hopes the US will stage a speedy recovery from its current downturn.
Mr Welteke's comments reiterate part of the ECB's policy message issued in a statement the bank released last Friday.
The surprise ECB statement, which said the bank was maintaining a wait and see stance on interest rates, came after some top ECB officials had appeared to signal a softening in the bank's rhetoric with remarks that fanned speculation of a rate cut soon.
Mr Welteke will speak again later today when he addresses the Bundesbank's annual news conference.