The European Central Bank has repeated that its current interest rates are appropriate to guarantee stable prices in the medium term.
In its July monthly report, closely echoing the statement after its July 5th meeting, it said its recent decisions to keep rates unchanged reflected the view that their current level ensured low euro zone inflation ahead.
"Overall . . . the current stance of the monetary policy of the ECB should ensure price stability over the medium term," the ECB said.
The ECB has kept its key lending rate unchanged at 4.50 per cent since its quarter-point cut on May 10th.
The central bank also repeated its standard line that by keeping a lid on inflation it made its best contribution to sustainable euro area economic growth.
The ECB echoed its assurances that barring new negative price shocks, euro zone inflation, which stood at an eight-year high of 3.4 per cent in May, should fall this year and come down below the bank's 2 per cent ceiling in 2002.
It said both the temporary character of recent shocks caused by food and energy price increases and the current monetary policy stance argued in favour of this scenario, even though monthly inflation rates could remain volatile.
The ECB also repeated that despite signs of further slowdown in the second quarter of 2001, euro zone growth should stay within its 2.0-2.5 per cent long-term potential range this year and next.