The European Central Bank today reaffirmed its "wait-and-see" interest rate policy stance, saying the euro zone faced high uncertainty on inflation and growth prospects.
"Risks to price stability are at present balanced," the ECB said in its October monthly bulletin, which largely repeated a statement by bank president Mr Wim Duisenberg last week following the ECB's decision to leave interest rates unchanged.
The ECB has kept its benchmark refinancing rate steady at 3.25 per cent since last November.
The stronger euro and general economic weakness were helping to dampen inflation but high oil prices, wage rises and money supply growth pointed to risks in the opposite direction.
There was also high uncertainty about when the euro zone and world economy would begin to strengthen again. An oil price jump on fears about war in Iraq and the slide in share markets, which could hit euro zone consumer spending, were big risks.
Earlier hopes that the euro zone economy would begin to speed up in the second half of this year had been disappointed, but the ECB said it still expected the region to return to 2 to 2.5 per cent growth in 2003.