European Central Bank President Jean-Claude Trichet was quoted on Thursday as saying he does not see deflation risks materializing in the euro zone.
In an interview with Italy's La Repubblica newspaper, he also denied that budget cuts would drag on growth in the 16-nation region.
Asked about the risk of deflation, he said: "I don't think that such risks could materialize," adding that inflation expectations were well anchored.
"As regards the economy, the idea that austerity measures could trigger stagnation is incorrect," Trichet said, according to an English-language transcript published on the ECB's website.
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