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Last Updated: Monday, 3 October 2005, 19:26 GMT 20:26 UK
Trichet not satisfied with growth
ECB President Jean-Claude Trichet
Mr Trichet has predicted that the eurozone economy will pick up
Jean-Claude Trichet, president of the European Central Bank (ECB), has said that economic growth in the eurozone is not "fully satisfactory".

However, he added that economic growth would be helped by a central bank policy that ensured price stability and low inflation expectations.

The comments come as the ECB resists pressure to cut interest rates.

It has left rates unchanged for more than two years despite evidence that growth and manufacturing was slowing.

The ECB's benchmark interest rate is currently 2%, compared with 4.5% in the UK.

'Equally true'

Critics have accused the ECB of not doing enough to stimulate growth and of ignoring the problems faced by many companies in the 12 countries that share the single European currency.

Mr Trichet has argued that borrowing costs are at the right level and that inflation, driven higher by record oil prices, needs to be kept under control.

During a speech to the Danish central bank on Monday, Mr Trichet said that, "you will probably share the view that the growth performance of the euro area cannot be deemed fully satisfactory".

"But it is equally true to say that the single monetary policy, geared towards price stability and the anchoring of inflation expectations, lends ongoing support to economic activity," he added.

ECB-watchers will be pouring over Mr Trichet's comments for any indication of future interest rate moves.

The majority of analysts do not expect a rate cut this year, especially as there are signs that the economic environment is improving.

A report on Monday showed that Germany's manufacturing sector unexpectedly expanded in September, after contracting for five straight months. Germany is Europe's biggest economy.

The RBS/BME German purchasing managers' index rose to 51 in September from 48.7 in the previous month.

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