According the European Central Bank, economy runs better than expected
3 Sep
The European Central Bank (ECB) will keep interest rates steady at 1% and stated that will lend all the liquidity banks need at three months. At the same time, the European Central Bank increased his economic growth and inflation forecasts in the Eurozone when detecting a better behavior than the expected.
The good behavior of the economy in the Eurozone lead the European Central Bank to improve its forecasts for this year and the next. Their new forecasts on economic growth go through a growth between the 1.4% and the 1.8% this year,a very more optimistic lecture than the previous 0,7 and 1.3% forecasted in June.
Jean Claude Trichet, pointed that this rise in forecasts responds to a better economic growth in the Eurozone during the second quarter and the months of summer, better than the expected in a beginning.
The European Central Bank also increased his forecasts of economic growth for 2011.New forecasts are of growth between 0.5% and 2.2% instead of a range between 0.2% and 2.2%.
Under this figures,Jean Claude Trichet stated that there isn’t this double recession that many experts said after a lower than expected growth of American economy.
The forecasts on inflation have also been increased
The European Central Bank has also slightly increased his forecasts on inflation for 2010 and 2011.
Now estimates that this year inflation rate will reach a figure between 1.5% and 1.7%, from the 1.4% and 1.7% forecasted in June. “We continue committed with the stability of prices”, stated Jean Claude Trichet.
About 2011 the European Central Bank forecasted a increase between 1.2% and 2.2%, from the 1% and 2.2% forecasted in June. A inflation rate that includes the higher expected for raw materials.
The European Central Bank has always kept as main objective the stability of prices and was the last big central bank in adopt the radical cuts on interest rates to retrieve the economy from the recession, th opposite of the measures adopted by the Federal Reserve of the United States.
In this point of view, the European Central Bank kept for one more month interest rates at 1%, just as expected financial markets. Jean Claude Trichet said that current price of money is adequate and at the moment the European Central Bank won’t show signals of change in interest rates”.
Jean Claude Trichet stated that risks of deflation didn’t arrive to be real, and that all changes on inflation go to the correct direction. Jean Claude showed that as Ben Bernanke higher inflation rates aren’t a a pat to solve the problem of debt.
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