ECB changes tack on rates too late

April is the cruellest month, Breeding lilacs out of the dead ground," according to TS Eliot. Euroland should be so lucky.

Even the European Central Bank has now finally acknowledged that any green shoots of economic recovery sprouting this spring will be a sparse and weedy crop.

Last week, the ECB followed the US Federal Reserve Board and the Bank of England's monetary policy committee in cutting rates by 0.5%. The cut was bigger than many had expected - though the move by the Fed, in particular, gave the ECB little choice.

Had the ECB president, Wim Duisenberg, and his colleagues in Frankfurt proved timid, investors would simply have sold the single currency's socks off. Why? Because, as Mr Duisenberg finally acknowledged, the outlook for the 12-nation single currency zone is rather less rosy than the ECB had previously thought.

Thursday's press conference represented the nearest Mr Duisenberg is likely to come to saying mea culpa, after initially downplaying the potential impact of the September 11 attacks on European growth.

Unsurprisingly, the ECB has come under heavy fire for its conduct of monetary policy: for doing too little too late; for giving anti-inflationary policies too high a priority. Quite simply, say critics, it is fighting the wrong battle.

The snag is that the ECB's mandate insists that it has to maintain price stability, and only once that is achieved can it consider doing anything about growth. OK, the ECB is not the world's best central bank, but it is hard to see anyone else doing much better with the Maastricht treaty's monetary policy rule book.

The question is whether the ECB's mandate will be changed. Don't hold your breath. In the short term, the most that can be expected is the kind of tinkering seen last week, with the decision to cut the number of interest rate setting meetings from two to one a month.

It is a welcome move and should remove a degree of market volatility, but it is hardly a core reform. Further out, however, there is some hope. Mr Duisenberg may be more willing to dish out advice than to take it. He routinely lectures politicians on the need to stick to strict budget arithmetic, but then blithely disregards outside opinions - in the cause of independence, you understand.

Nor does he brook much internal dissent. Asked if the statements of other members of the ECB governing council might confuse markets, Mr Duisenberg tetchily responded by saying that if people listened only to him, they would not be confused.

That may amuse the press. One can only wonder if it plays as well at the Bundesbank and the Banque de France. Probably not. In fact, signs are emerging that the "consensus" among ECB governing council members is beginning to crack.

That may simply reflect early manoeuvring in the race to replace Mr Duisenberg when he steps aside. But if the politicians pressing for greater dialogue - in other words, more influence over ECB policy - find allies within the bank itself, the combination could open the way for more fundamental reform.