The Governor of the Central Bank, Mr Maurice O' Connell, had a succinct response to calls by some EU finance ministers at the weekend for a speedy cut in interest rates.
"Interest rates are a matter for the European Central Bank (ECB) and that's the end of it," he said.
The central bankers were irked by persistent interventions on the part of Austria's Mr Karl-Heinz Grasser during a meeting of EU finance ministers in the Swedish port city of Malmo. Mr Grasser said that the ECB should act now to prevent the US slowdown from strangling economic growth in Europe. And he claimed that a majority of his colleagues agreed with him.
A clearly rattled ECB President, Mr Wim Duisenberg, denied that most EU finance ministers are calling for an interest rate cut. And he played down the impact of the US slowdown on the euro zone economy. "We are a large autonomous area with more than 300 million people and although the impact from outside is not negligible, it is very limited indeed," he said.
The ECB admits economic growth in the euro zone will be slower in 2001 than last year but Mr Duisenberg remains confident that the economy will grow by about 2.5 per cent. The European Commission is expected to make a similar forecast this week and the Commission President, Mr Romano Prodi, has denied that the ECB is under pressure to move on interest rates.
There are worrying signs, however, of trouble ahead in Europe's biggest economies, especially in Germany, where the government will consider itself lucky if the economy grows by more than 2 per cent this year.
The ECB argues that, as an institution charged with maintaining price stability rather than encouraging growth, it has no reason to cut rates. Inflation and money-supply growth remain above the Bank's target figures. Mr Duisenberg can argue plausibly that a growth rate of 2.5 per cent is respectable for the euro zone.
Critics complain that Mr Duisenberg and his colleagues on the ECB's Governing Council are applying a perversely narrow interpretation of their remit. They point out that, if decisions are to be taken from a medium-term perspective - as the ECB claims they are - central bankers should consider the likely inflation threat in 18 months.
The most likely explanation for the ECB's refusal to budge is the Bank's struggle to be perceived as independent, responsible and free of political influence. With the launch of euro notes and coins only a few months away, Mr Duisenberg is concerned that European citizens must perceive the currency as backed by a central bank they can trust.
As they queued up to pour scorn on Mr Grasser, some EU finance ministers privately agreed with his analysis and hoped the ECB would ease its monetary policy. By opening his mouth so publicly on the issue, the hapless Austrian may have made it more difficult for the central bankers to grant that wish.
