PARIS, April 1, 2008 (AFP) - The eurozone economy may be slowing down but it faces no risk of recession at the moment, unlike the the situation in the United States, French central bank head Christian Noyer said on Tuesday.

The short-term 'economic outlook is much more encouraging in the euro area than in the US,' Noyer said according to the text of speech given in Prague and made available here.

'If our (eurozone) economies are slowing down, no recession lies on the horizon,' said the head of the Bank of France.

As regards the ongoing turmoil sparked by US subprime home loan collapse, Noyer said the 'crisis is clearly not over and all the consequences of accumulated financial imbalances have not unravelled yet.'

The central bank chief noted that although the US Federal Reserve had slashed interest rates sharply to keep the economy on track and help ease a credit crunch, the European Central Bank had kept its rates unchanged.

Both businesses and politicians have criticised the ECB for this stance but Noyer said that both the Fed's and the ECB's actions could be reconciled if the much greater US economic uncertainty was taken into account.

A 'major financial disruption (involving the banking system) in less likely in the euro area than in the US.

'European banks are of course not immune from losses due to their exposure to the US subprime market but ... this exposure is significantly lower than that of their US counterparts.'

A crisis in the eurozone should also be less of a problem given the area's much lower rates of household debt compared with the United States, he said.

Noyer said the great challenge facing central bankers in such difficult times was to ensure that markets got the message that monetary policy was a medium-term concern compared with short-term liquidity management.

This was especially the case during a time of rising inflation, when interest rates would normally be increased to keep prices in check.

Injecting funds into the financial system -- as both the Fed and ECB have done -- to get credit flowing again should not be seen as any slackening of resolve over the need to keep inflation under control, he added.