ECB Raises Growth Forecast
The European Central Bank raised its forecast for growth for the rest of this year and next year due to a strong second quarter for the euro zone nations, but the bank left its benchmark refinancing rate at a record-low of 1 percent for the 16th month in a row.
The recent economic data from the euro zone was better than expected, according to the ECB President Jean-Claude Trichet on Thursday, who added that "Looking ahead, the recovery should proceed at a moderate pace with uncertainty still prevailing."
The ECB is now predicting growth of 1.4 percent to 1.8 percent, which is up from a prior view of 1 percent. The bank said that for 2011 growth is expected to be in the range of 0.5 percent to 2.3 percent, which centers on 1.4 percent, up from a prior outlook of 1.2 percent.
Trichet added that the ECB will perform a three month fixed rate tender operation from October to December, which will be an effort to keep money flowing in the European banking system after the government debt crisis that recently impacted the region.
"Overall, the current monetary stance remains accommodative," Trichet said. "Our monetary analysis confirms that inflationary pressures over the medium term remain contained, as suggested by weak money and credit growth."
The ECB did not indicate when it was planning to end the program of buying up government bonds that was set in place earlier this year at the height of the sovereign debt crisis. There has been little activity in that program recently.
There have been global indicators in recent months that the economic recovery from the worldwide recession may be slowing. The U.S. Federal Reserve has admitted that it may have to concede to another round of monetary easing if the economy continues to slow.
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