German Finance Minister Mr Oskar Lafontaine said yesterday he regretted the public controversy triggered by his recent calls to the Bundesbank to ease its monetary policy.

But the Minister rejected suggestions he was seeking to undermine the autonomy of Germany's central bank and reserved the right to continue making his opinion heard in public.

"I'm sorry this discussion has gone wrong," he said of the cool reception given to his interventions by Bundesbank officials, including the president, Mr Hans Tietmeyer. "But we live in a democracy and all institutions are subject to public debate."

The German Chancellor, Mr Gerhard Schroeder, also sought to play down the debate during a trip to Britain, insisting that the independence of the Bundesbank was not at stake.

The Bundesbank confirmed earlier that Mr Lafontaine and his deputy Mr Heiner Flassbeck will take part in this week's regular central bank council meeting on Thursday. While his predecessor Mr Theo Waigel also sat in on council meetings from time to time, Mr Waigel's belief in the need for tight monetary policy largely mirrored the consensus in the bank itself.

Earlier, Bundesbank deputy governor Mr Juergen Stark hit the ball in the interest rate debate back into Bonn's court by saying that Europe's national governments should do their bit by keeping their budgets in order.

"Excessive deficits are damaging. The European Central Bank could be forced to react with interest rate rises," he told the Sueddeutsche Zeitung in an interview. The ECB will take over continental monetary policy on January 1st.

Both Mr Lafontaine and Mr Schroeder have refused to rule out new borrowing to finance their government plans, saying it is still not clear what shape ex-Chancellor Mr Helmut Kohl's government had left finances in after 16 years in power.