Brussels, 13/06/2002 (Agence Europe) - In its monthly bulletin for June published last Thursday, the European Central Bank (ECB) revised its forecasts of the level of inflation increases and confirmed the upturn in economic growth in the Euro-zone.
The ECB is expecting a rise in inflation in the Euro-zone of between 2.1% and 2.5% in 2002 (last December it forecast a rise of between 1.1%-2.1%). According to some analysts, this means that the ECB is effectively convinced that the level of inflation will exceed the maximum threshold that it had set for an annual average increase, namely 2% for the third year in a row. This admission also confirms that the ECB is gearing up for a relatively short period before increasing its interest rates in an effort to combat inflation. The ECB forecasts a rate of between 1.3%-2.5% in 2003 (forecasts of 0.9%-2.1% in December). According to the ECB this development is "less satisfying" than previously envisaged and can be put down in large part to a "series of negative shocks", such as the increase in oil prices. The worrying results of wage negotiations was also a factor, warned the ECB, stressing that "high wages rises should not be across the board".
The ECB is counting on an average increase in GDP in the Euro-zone of between 0.9%-1.5% in 2002, which could, however, reach between 2.1%-3.1% in 2003. In the ECB editorial it describes how, "despite rather encouraging perspectives, the assessment of the short-term dynamic of real activity is still surrounded by uncertainties".