Elmeskov was elaborating on OECD forecasts of insipid economic growth throughout the industrialised world and a statement in which the Paris-based forecaster said it saw no need for central banks to alter current monetary policy stances.

In the interview, conducted before the ECB decides interest rates on Thursday, Elmeskov said underlying euro zone inflation had been creeping steadily upwards since 2005 and this trend was particularly worrying.

"The dynamics in the U.S., in that sense, look a little less frightening," Elmeskov said, adding that this upward creep had set in long before the acceleration in headline inflation caused since last year by soaring food and fuel prices.

"It's not just something that's arisen over the past 5 or 6 months as the oil price spiked. It's a much older, long-running trend, and that makes it very difficult to change monetary policy at this stage," he said of Europe.

"There's inflation momentum there that needs to get out of the system," Elmeskov said, adding that fiscal stimulus was not an option, nor monetary stimulus via interest rate cuts as long as the inflation danger was still lurking.

With such limited options, it appeared the price to be paid was a period of economic downturn that would with time lead to a drop in inflation, according to Elmeskov.

"In some sense you can say that, with a mandate to preserve price stability, what can you do as a central bank? You have to accept some degree of slack in the economy in order to bring inflation back to what you define as price stability," he said.

Unlike the U.S. Federal Reserve, which has cut interest rates in response to economic downturn, the ECB raised interest rates in the euro zone in July and says its policy for monetary policy now is 'no bias' -- central bank code for saying its next move may be in either direction.

"There's just not that much that can be done at the moment," said Elmeskov. "If at some stage there was a clear movement towards disinflation ... at that point there may be room for manoeuvre but we're not there yet. It's not something imminent."

The annual rate of headline inflation in the euro zone hit a record 4.0 percent in July and eased to 3.8 percent in August after a dip in world oil prices, according to preliminary estimates, while the ECB's medium-term target is something just short of two percent.

Back in June, the OECD had already said the ECB should keep rates on hold for the next 18 months but be ready to respond if either economic growth or inflation prospects worsened abruptly.

The OECD cut its 2008 growth forecast for the area in the updated figures published on Tuesday. But Elmeskov pointedly declined to say that the ECB should perhaps consider a cut in rates due to the worse-than-previous outlook for growth.

The forecast for euro zone GDP growth was cut to 1.3 percent for this year from a prediction of 1.7 just three months ago.

"Disinflationary effects should come through more rapidly (as a result), but that is everything else being equal and I can't tell you all else will be equal.

"There could well be a risk that this reduction of inflation could be a drawn out process," he said. "At this stage I think the ECB is right in saying 'no bias' because one cannot guard against unpleasant surprises on the inflation side either."

The euro had recently weakened against the dollar as financial markets adjusted to the prospect Europe might end up slowing harder than thought. This might make it easier for the region to export but raised inflation risks too, he said.

"It's good news for activity and not so good for inflation."

FED, BOJ AND BOE

Elmeskov said U.S. monetary and fiscal policy were suited to the situation there and that in Japan the central bank needed to hold off on any temptation to raise interest rates for now.

"In the underlying sense, it's only a gradual emergence from deflation and given the need to establish a buffer to avoid falling back into deflation we see the Bank of Japan having to maintain interest rates at current levels at this moment, and likely for some time," Elmeskov said in the interview.

Britain, not part of the euro currency group, was in a somewhat similar situation to the rest of Europe, said Elmeskov.

"In Britain, again, we have an economy that clearly has had very high inflation. That makes it very difficult at this juncture for the Bank of England to react to a situation that looks like one where slack will be increasing rather rapidly."

"That said, you can expect slack to begin to bear down on inflation in a way that would allow the Bank of England to reduce interests rates, but when that would be I just cannot say."