ECB policymakers reject rate cut talk

By Thomas Atkins and Eva Komarek

DAVOS, Switzerland/VIENNA (Reuters) - European Central Bank policymakers rejected talk of lower interest rates and restated their anti-inflation stance on Thursday, despite politicians saying a rate cut could be on the cards.

Since the U.S. Federal Reserve slashed rates by a surprise 75 basis points on Tuesday, economists have brought forward bets that the ECB will also ease policy, with most seeing a rate cut by the end of September according to a Reuters poll.

But Bundesbank President Axel Weber, who sits on the ECB's rate-setting Governing Council, dismissed this speculation.

"There may be a certain wishful thinking priced in there," he told Bloomberg Television.

"We have a positive economic outlook and as long as that doesn't change I would say that rates are still on the accommodative side and in no way restrictive."

His Austrian colleague, Klaus Liebscher, also gave no indication that the ECB was about to cut rates, saying he was "really concerned" about inflation.

"We have to fulfill our paramount goal, which is to grant price stability. This will be our focus in the near future," he told Austrian newspaper Salzburger Nachrichten.

The euro strengthened against the dollar and the yen and bond traders scaled back rate cut expectations after the central bankers' remarks.

Nonetheless, Spanish Economy Minister Pedro Solbes gave support to rate cut expectations when he told broadcaster Telecinco that there was "significant debate" within the ECB about whether to do this.

ECB President Jean-Claude Trichet has said that at the last two ECB meetings, policymakers only discussed raising rates or leaving them unchanged at the current 4 percent level.

Speaking at the World Economic Forum in Davos, Switzerland late on Thursday, Trichet reiterated that controlling inflation was the ECB's main goal.

"There is one needle in our compass and it is price stability. There is no contradiction between price stability and financial stability," he said.

Earlier French Prime Minister Francois Fillon implied the ECB might take similar action to the Fed's on rates.

"In the recent past the European Central Bank has fulfilled its role and has taken very positive decisions. It has the same worries as the Fed and will be wanting to take effective action," Fillon said in an interview with the Financial Times.

Unlike the Fed, the ECB has kept rates steady since the start of financial market turmoil linked to the U.S. subprime mortgage crisis in August last year.