European Central Bank president Jean-Claude Trichet has said it was too soon to declare the financial crisis over and that exceptional ECB credit support measures would remain in place for now.
Speaking a day after the bank left its key interest rate unchanged at a historic low of one per cent, Mr Trichet addressed the issue of "exit strategies", or when it would begin to unwind extraordinary steps taken over the past two years.
It was "too soon to call the crisis over," he told analysts gathered in Frankfurt, while also making clear that at some point "financial institutions ultimately need to stand on their own two feet".
The ECB has slashed interest rates, loaned unlimited amounts of cash to banks for periods of up to one year and launched a programme to buy low-risk corporate bonds to unblock a key eurozone financial market.
Markets now want to know when the bank will begin to undo its exceptional measures, but Trichet emphasised that "we will unwind these measures when the situation returns to normal and the rationale for the measures fades away."
The programme of what the ECB prefers to call "enhanced credit support" has helped to buffer the eurozone from global financial turmoil, but the 16-nation economy nonetheless fell into recession for the first time since its creation in 1999.
After contracting by a modest 0.1 per cent in the second quarter of this year however, the zone appears set to post growth in the following three months.
The ECB governing council said on Thursday there was an "expectation that the significant contraction in economic activity has come to an end."
ECB chief economist Juergen Stark told financial analysts on Friday that the risk of eurozone deflation has disappeared.
"The risk of deflation in the euro area, which was never substantial, has however clearly receded since earlier this year and has now virtually disappeared," Mr Stark said.
In July, a decline of 0.7 per cent in consumer prices from the same month a year earlier raised fears the eurozone could spiral into deflation, which stomps on economic activity because consumers and businesses wait for prices to fall even more.
The price drop in August was a more modest 0.2 per cent however, underpinning the ECB's position that the development was mainly the result of a comparison with spiking energy prices in mid-2008.
Mr Stark said the key issue now was to "correctly identify the turning point" in the economic cycle, since withdrawing economic support too quickly could stifle a rebound, while waiting too long could fuel another financial crisis by allowing inflation to spiral out of control.
His comments will likely reinforce speculation that the bank's main lending rate has now reached a floor and that the next change would be an increase.
That was not expected however before mid-2010 at the earliest.