The rate cut last week by the European Central Bank (ECB) should be the last in the current cycle, according to the bank's deputy president, Mr Christian Noyer.
The move would "normally be the last interest rate reduction in the present cycle", Mr Noyer said.
Asked to elaborate, he added: "Of course you can never say `never', but as far as we can see, I stick to what I said. I feel rather categoric."
Last Thursday, the ECB caught the world's financial markets off guard by lowering its key refinancing rate by half a percentage point to 2.5 per cent, much steeper than expected. It also reduced its other two key rates: the deposit rate from 2 per cent to 1.5 per cent and the marginal lending rate from 4.5 per cent to 3.5 per cent.
Mr Noyer said it was now up to politicians to play their part.
With the high degree of price stability and the very low level of rates, "we think we have done all we can to create economic growth. There's not much more we can do," Mr Noyer said, echoing recent comments by a whole range of monetary officials, such as ECB president Mr Wim Duisenberg, ECB chief economist Dr Otmar Issing and Bundesbank president Mr Hans Tietmeyer. They all said separately that it was now up to governments to move forward with structural reforms.
Asked why the ECB had taken any action at all, given the apparent absence of any threat to its primary goal of price stability, Mr Noyer said there had been two main factors.
"First of all, price stability can never be established for ever. You always have to be attentive to developments. When there is more downside risk than upside risk, you must always act to ensure favourable conditions continue," he said.
Secondly, when price stability is assured and the central bank can act to increase growth, the Maastricht treaty says it should do so, he said.
Mr Noyer said the ECB had not fundamentally changed its opinion that a pickup in the economy of the euro area might be seen in the second half of the year. Nevertheless, various indicators were pointing to a greater risk on the downside.
