The European Central Bank kept its main interest rate unchanged at a record low of 1% today, as expected by economists.
After the decision, ECB president Jean-Claude Trichet told reporters there were increasing signs of a stabilising of economic activity in the euro zone and elsewhere.
'This is consistent with the expectation that the significant contraction in economic activity has come to an end and is now followed by a period of stabilisation and very gradual recovery,' he said.
He said ECB staff had slightly upgraded their forecasts for economic growth in the zone this year and next. They now expect the euro zone economy to shrink by between 3.8% and 4.4% this year, while next year they expect a range of -0.5% and +0.9%.
But Mr Trichet warned that uncertainty remained high, and a recovery would be 'very gradual' and 'uneven'.
The ECB has lowered its rates from 4.25% since October as the financial crisis wreaked havoc in the euro zone economy and inflation risks have subsided.
Since the ECB's August meeting, figures have shown Germany and France came out of recession in the second quarter and upbeat survey data have fanned hopes that the euro zone economy may return to growth in the current quarter.
In Paris, the Organisation for Economic Cooperation and Development said today that the US and euro zone were on track to pull out of recession in the third quarter of this year but that the outlook beyond was still highly uncertain.
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. They also do not think the ECB will reverse other policy measures any time soon.
The entire 16-nation economy contracted by just 0.1% in the second quarter of 2009 owing mainly to lower investment, but still marked a big improvement from the record 2.5% drop in the first three months of the year.
