The European Central Bank trimmed its 2004 and 2005 economic growth estimates but raised its forecasts for inflation, president Jean-Claude Trichet said today against a backdrop of a soaring euro and oil prices.
For 2004, the ECB cut its forecast for gross domestic product growth in the 12-nation euro zone to 1.8% from an estimate of 1.9% made in September. It forecast 1.9% growth in 2005 compared with 2.3% previously.
But it raised its 2005 inflation forecast to 2% - the maximum tolerable limit for the ECB - compared with 1.8% previously. It left its 2004 inflation estimate at 2.2%.
The euro zone central bank also gave its first estimates for 2006, forecasting growth of 2.2% and inflation of 1.6%.
Earlier, the ECB, as was widely expected, decided to leave its key interest rate unchanged at 2%, the level at which it has been since June 2003.
