ECB says euro zone inflation risks easing

The euro zone's economy is recovering more slowly than expected but inflation risks have eased, the vice president of the European…

The euro zone's economy is recovering more slowly than expected but inflation risks have eased, the vice president of the European Central Bank was quoted as saying.

Mr Lucas Papademos told Italy's Il Sole 24 Orehe expected the euro zone's economy to pick up at the end of 2002 and the beginning of 2003 and said the recent strengthening of the euro currency against the dollar reflected economic fundamentals.

Asked whether the ECB was pondering an interest rate cut, Mr Papademos said: "Developments in recent months indicate that the risk factors concerning price stability have become more balanced recently".

He said both the parameters and principles of the European Union Stability Pact should be respected, but said certain measures aimed at improving "the efficiency" and "credibility" of the pact could be discussed.