European Central Bank (ECB) president Mr Wim Duisenberg said today ECB interest rates were at the right level and it was up to governments to spur higher growth by pursuing energetic reforms.
"The risks to price stability over the medium term are at present balanced. We thus consider the current level of ECB interest rates to be appropriate," Mr Duisenberg said in testimony to a committee of the European Parliament.
Despite slow growth and ongoing financial market turmoil, Mr Duisenberg said his overall assessment of euro area banks was that they are in good shape.
The recovery in the euro area and worldwide was slower than expected and uncertainty for monetary policy makers remained high due to sharp falls in the stock markets and the high price of oil on international markets, he said.
Mr Duisenberg warned euro zone governments that the benefits of the single currency could not be reaped without speedier reforms.
"Structural reforms in product, labour and financial markets are essential in order to foster non-inflationary growth in the euro area and create a climate of economic stability and dynamism," he said.
"Monetary policy will continue to provide a reliable anchor for the economy, especially in an environment characterised by high uncertainty and fragile confidence," Mr Duisenberg said.
The ECB's focus will continue to be on maintaining price stability, he said. He noted inflationary pressures had declined but that monetary developments, wage trends and oil prices needed to be monitored.