The governor of the Central Bank, Mr John Hurley, said today that growth among the 12 countries using the euro has been disappointing.
Speaking ahead of tomorrow's regular meeting of ECB policymakers in Frankfurt, Mr Hurley said the risks to growth in the euro zone are now clearly on the downside with the weak dollar a particular concern.
"We're disappointed that growth, particularly in the euro area, is not as strong as we would have wished," Mr Hurley said in an interview on Bloomberg television.
Official figures last week showed the euro zone economy expanded 0.3 per cent in the third quarter, the slowest pace in more than a year, after disappointing growth in France and Germany.
But Mr Hurley said the ECB expected the recovery to continue, and there was no evidence of brewing inflationary pressures. "I would expect the recovery to continue with less momentum than we saw in the first half of the year," he said.
He said sudden movements in the exchange rate were "damaging to economic growth".
The euro last week hit a new high of $1.3005 against the US dollar, harming the outlook for euro zone exports.
"Experience suggests that exchange rates can overshoot and this lies behind the very strong view that we have that we need to avoid excessive volatility and disorderly movements," Mr Hurley said.
But he said targeting a certain exchange rate was not part of monetary policy strategy. He said he was optimistic that inflation would slow below the ECB's benchmark of two per cent in the course of 2005 and said the medium-term outlook remained good as long as a check was kept on wages.
"The evidence doesn't suggest that underlying inflationary pressures are building," Mr Hurley said.