Business confidence has fallen substantially, while unemployment remains stubbornly high. But the lack of inflationary pressures does not seem to have persuaded the European Central Bank to cut interest rates when they meet on Thursday, despite intense pressure from the German finance minister Oskar Lafontaine. They are more concerned about the weakening of the euro, which fell to a new low against the dollar, and the continuing growth in European money supply. Both M3, which reflects how much individuals are borrowing, and the exchange rate are considered leading indicators of inflation. Higher prices for imported goods because of a weak euro could eventually boost inflation.
Interest rates are already at their lowest level since the Second World War.
His views have been backed in recent days by ECB board members Christian Noyer and Tommaso Padoa-Schioppa. The BBC is not responsible for the content of external internet sites.