Benoit Coeure, the Executive Board member of the European Central Bank has said that the central bank's decision to cut rates in November was not a response to the the slowing price growth, or disinflation in the region. He said that the interest rate was not over risks associated with deflation in the euro area, while speaking in the Japanese capital, Tokyo on Monday.

As the region shows signs of recovery, the central bank expects the interest rate to rise and remain below the 2 per cent mark. Coeure said in Tokyo, "We did not act because we see deflation risks materialising in the euro area. Rather, we acted because we wanted to keep a sufficient safety margin above zero per cent inflation." The ECB expects the deflation to continue in the gradually recovering economy and might rise to remain below 2 per cent.

Coeure has said that the economy is stabalising and the banking sector is strengthening but reforms are still required. The euro zone inflation remains at around 0.7 per cent, which is much lower than its target of just under 2 per cent. The central bank is now considering taking new steps to avoid deflation to protect the economic revival.