The sharp moderation in global growth momentum witnessed over the past number of months has elicited the obvious and sensible policy responses from most of the world's leading central banks.

Among the industrialised countries, the US, Japan, Canada and the UK have enjoyed interest rate cuts since the turn of the year, with policymakers co-operating in a joint effort to prevent the current weakness of economic activity from transforming into an outright recession.

Only the European Central Bank has steadfastly refused to take part in the great loosening of monetary conditions that is currently under way.

We are told by the relevant authorities that the stability of euro-zone interest rates is soundly based, with growth remaining robust, the euro still struggling, and inflation pressures remaining prevalent.

Moreover, we are assured that the euro zone, because of its relatively limited trading relationships with the rest of the world, will manage to escape the adverse effects of the US slowdown. It seems that some policymakers believe that the single currency area is hermetically sealed from economic events in the world beyond.

Against this remarkably bullish backdrop, one would expect the euro to be soaring on the foreign exchanges. Surely, this rock of stability at a time of great uncertainty should be attracting investment flows from the rest of the world.

If the ECB's prognostications are to be taken at face value, nervous investors the world over would be pouring their funds into euro-zone assets. The verdict of the foreign exchanges, with the euro languishing around the $0.90 level, suggests that the ECB's spin on current events represents a triumph of hope over reality.

The euro zone's economic prospects are already deteriorating and are set to worsen as last year's key driver of activity becomes inert. The year 2000 presented the euro zone with a remarkably positive external environment on the back of a 10year peak in global growth and a competitiveness-boosting euro depreciation.

These factors more than compensated for lacklustre domestic buoyancy last year and allowed the euro zone to enjoy what was, by its own standards, a spectacular growth rate of 3.4 per cent.

This year, the game has changed and the external environment will impose a restraint on euro-zone economic activity. If the single currency area is to enjoy a reasonable growth rate in 2001, it will have to be internally generated.

Having despaired of the ECB's isolationist tendencies for some months, markets were cheered a fortnight ago when signals of an imminent rate cut were relayed through the usual channels.

Most promisingly, Bank of France governor Mr Jean-Claude Trichet and ECB chief economist Mr Otmar Issing gave a strong impression that near-term policy action was on the agenda. However, this sprig of hope appears to have been premature, with Mr Trichet later delivering a statement on behalf of the ECB that confirmed its long-standing "wait and see" approach.

The message that interest rates were not going to be cut over the near term was received loud and clear. These antics also had a nasty side effect, with yet another erosion of the ECB's already fragile credibility. A contemptuous relationship is in danger of being formed between the ECB and dealing rooms the world over.

Contrary to the viewpoint of euro-zone policymakers, the case for an immediate rate cut has merits in abundance. A loosening of monetary policy would raise the growth momentum of the euro zone and would restore credibility in the management capabilities and operational style of the ECB.

These factors alone would be sufficient to drive the euro higher on the exchanges and, in so doing, diminish any imported inflation risks that have managed to survive the downgrading of global growth expectations. A rate cut would rebalance monetary conditions and, critically, have the potential to remove the euro's one-way status.

In considering the economic dimension of the ECB's decision-making process, we shouldn't lose sight of related issues of self-interest and international policy harmony. Given the force of the global slowdown and the ECB's splendid isolationism, it is reasonable to suggest that Frankfurt's stock has fallen among US policymakers.

Its apparent refusal to co-operate in the Fed's "save the world" endeavours could prove costly once the US economy recovers and the euro begins to falter on the exchanges once again. It is easy to imagine the reaction of the Bush administration to future cries for help from a disengaged ECB.

The ECB has an opportunity to undergo a restoration with nothing but upsides for the euro zone and the world. All it would take would be a concession that the US slowdown is already hurting, an aspiration to be a good global citizen and a 0.5 per cent cut in interest rates on April 11th.

Colin Hunt is head of research at Goodbody Stockbrokers