Central bankers from the world's major economies gather in the Swiss city of Basel today to discuss whether the sluggish world economy is finally starting to respond to stimulus from record-low interest rates.
On the eve of the meeting at the Bank for International Settlements (BIS), a senior European Central Bank official said euro zone interest rates had fallen far enough to support a rebound that was expected by year's end.
"We have stability of interest rates at a very low level. It is not a time to speculate about a new cut in interest rates. It is time to invest," ECB Governing Council member Mr Guy Quaden told reporters in Basel.
"The probability that the economy recovers in the euro zone before the end of the year . . . has improved," Mr Quaden said. "The risks are more balanced, but there are still risks."
Growth stagnated in the second quarter in the 12-nation bloc but the central bank expects recovery by year end and to accelerate into 2004.
Central bankers have become more upbeat than three months ago when the annual report from the BIS, which acts as global banker for central banks, said world growth was stalled with no evidence of a robust expansion building.
Financial markets, however, are displaying confidence that three years of bruising losses are over and recovery is taking firm hold.
The Standard and Poor's 500 Index has gained 27 per cent since early March on improving corporate and economic news. The FTSE 100, buoyed by signs that both Japan and the United States are rebounding, is up 29.5 per cent from its March trough. Bond yields in the United States and Europe likewise have shot higher on recovery hopes.