The eurozone economy is on track for a gradual recovery later this year.

European Central Bank President Mario Draghi said it has been driven by loose monetary policy and demand from abroad.

The ECB cut interest rates to a new record low in May.

It said it would act again if necessary but its hand may in part be stayed this month.

It may act going forward by a rebound in inflation, which rose back to 1.4% in May from 1.2%  in April.

That is still below the bank's roughly 2% target and unemployment in the eurozone reached a fresh high in April at 12.2%.

The figures have led to  calls for policy makers to do more to help the economy.

After the ECB's last policy meeting a month ago, the bank said economic activity should stabilise and recover gradually.

The bank meets again on rates next Thursday.

A court hearing will take place in Germany later this month on complaints about the ECB's new government bond purchase programme.

Mr Draghi said the threat of the ECB buying bonds had played a key role in calming financial markets.

He said: "Virtually all economic agents, including corporations, banks and households" were benefiting.

Calmer markets have given governments more breathing space to adjust.

Last week, the European Commission announced that several countries would have more time to meet deficit targets.

But Mr Draghi urged governments to stick to their reform paths.