Financial decision-makers from the world's biggest economies pledged at the weekend to limit the damage to global growth from the September 11th attacks on the United States, but stopped short of agreeing unified action on interest rates or tax initiatives.
Despite US and International Monetary Fund pressure at the one-day meeting in Washington of the Group of Seven (G7) industrialised nations, Mr Wim Duisenberg, president of the European Central Bank, dampened speculation that the bank would cut rates again soon, perhaps at its next meeting on Thursday.
"There are reasons to be confident that the slowdown currently underway in the euro area will be short-lived," Mr Duisenberg explained after the meeting of finance ministers and central bankers from the United States, Canada, Japan, the United Kingdom, France, Germany and Italy, which Rusia also attended.
The current level of interest rates in the euro zone "is seen to be consistent" with the central bank's main goal of keeping inflation under control," added Mr Duisenberg.
His remarks reflect the views of EU finance ministers that European economies are not facing imminent recession despite the new forces dragging economies down, whereas US Treasury Secretary Paul O'Neill has said he believes the US economy is already contracting.
Mr O'Neill indicated before the meeting that he would like to see bold measures by the European and Japanese central banks, "Every one of our countries should take action necessary to play its part in accelerating recovery," Mr O'Neill said,.
He found an ally in his call for stronger measures in Mr Horst Kohler, managing director of the IMF. Warning before the G7 meeting that a coordinated international response was necessary, Mr Kohler said there were "good reasons" to expect an upturn starting in the first half of 2002, but "there is also a non-negligible probability of a worse outcome."
The European Central Bank should "if necessary, use the room for additional easing" of rates, he said, while in Japan "there is still scope for more decisive monetary action."
European and Japanese central banks lowered interest rates in concert with the US Federal Reserve in the week following September 11th but have not moved as agressively as the Fed.
Tax cutting and measures to increase spending are more feasible in the US than in other G7 countries which are inhibited by higher debt levels and inflation concerns.
Japanese Finance Minister Masajuro Shiokawa said ministers stopped short of talking about jointly intervening in markets.
"We said we would continue to monitor exchange markets closely and cooperate as appropriate," he told reporters. "We did not talk about concerted intervention."
In an attempt to display united resolve, the G7 leaders staged a rare joint press conference after their Saturday meeting, which was held in the US Treasury under the joint chairmanship of Mr O'Neill and US Federal Reserve chairman Alan Greenspan.
The finance ministers announced agreement on an action plan to track down terrorist finances with the help of the multi-national Financial Action Task Force, which is to hold a special crisis meeting in Washington on October 29th and 30th.
The task force was set up to investigate money laundering in the global drug trade.
UK Chancellor Gordon Brown said any new rules should apply to off-shore tax havens and a plan of action should be agreed where each G7 country "takes similar actions in relation to the freezing of money and in the exchanging of information where there are suspicions."
Mr O'Neill said yesterday that he had found more cooperation than he had expected on sharing information on funding for terrorism. "We are well on the way to building an international coalition to disrupt terrorist fund raising," he told CBS television.
The G7 also pledged to assist poor countries suffering from the economic slowdown.
