VIENNA (AFX) - Dutch Finance Minister Gerrit Zalm said he expects the European Central Bank to raise interest rates to a more neutral level as the euro zone economy recovers.
Zalm told a news briefing that the present level of ECB rates 'is not considered as neutral by anyone'.
'I would expect rates to go to a more neutral level as the economy recovers,' he said.
He said further rate rises will not reflect any desire by the ECB to dampen the pace of recovery, but rather will be the result of the fact that the recovery is continuing.
He said he expects the recovery to be stronger than forecast by the EU Commission, which is currently projecting euro zone growth of 1.9 pct in 2006.
Zalm said the current level of the euro iss close to the rate at which it started in 1999 and therefore cannot be a great handicap for the euro zone economy.
The euro was at 1.2125 usd in late trading on Friday. steve.whitehouse@afxnews.com sw/pp COPYRIGHT Copyright AFX News Limited 2005. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News. AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited