Jean-Claude Trichet, the European Central Bank (ECB) president, won rare political support yesterday for the bank's stance on interest rates when he appeared at the European parliament.

Mr Trichet has come under growing pressure from political leaders in France, Germany and Italy to cut rates to bolster the euro zone's flagging economy.

But yesterday, the bank's hardline position was endorsed by the parliament's monetary affairs committee, which suggested a rate cut would do more harm than good.

The committee's report gives Mr Trichet political cover ahead of Thursday's rate-setting meeting at the ECB, at which rates are expected to be held at two per cent for the 25th consecutive month. Last night, Mr Trichet told the parliament that long-term interest rates were at the lowest level for a century and the cost of borrowing was giving "considerable support" to economic growth. However, he rejected a proposal by parliamentarians for an annual ECB evaluation of the benefits of the single currency for citizens.

The committee's report said the ECB had "reacted correctly to economic and financial developments in 2004" and said it should continue to be vigilant over "oil prices, residential property prices and to the still prevailing excess liquidity".

The report "lauds the ECB's policy to concentrate on its prime objective of maintaining price stability", which it said laid the foundations for sustained growth.

"The relative weakness of economic activity results from a lack of structural reforms," it adds.

The report lends weight to Mr Trichet's arguments against a rate cut, and his efforts to resist pressure from European leaders. - (Financial Times Service)