ECB President Jean Claude Trichet has suggested that the beginning of the end of the recession is now in sight.
Mr Trichet said there were indications that 'the significant contraction in economic activity has come to an end.'
Despite the crisis in the credit markets, shrinking economies and rising unemployment, he foresees a period of stabilisation and gradual recovery.
Mr Trichet's comments came after the European Central Bank left interest rates unchanged at 1%.
He described the rate as 'appropriate'.
The ECB President commented that 'the significant contraction in economic activity has come to an end and that he is expecting 'a period of stabilisation and a very gradual recovery.'
The purchasing managers' index for the euro zone rose to 50.4 points in August, crossing the 50-point line that indicates business activity returning to growth.
The next interest rate movement is likely to be an increase as the economy recovers, but analysts do not expect that before well into 2010 at the earliest.
The ECB also increased its economic growth forecasts for this year and next year.
