Brussels, 02/09/2004 (Agence Europe) - Interest rates in the Euro-zone will stay the same for the sixteenth month in a row, indicated Jean-Claude Trichet, president of the European Central Bank (ECB) on Thursday. During its return meeting, the Board of Governors, decided that the minimum bid rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 2.00%, 3.00% and 1.00% respectively. Trichet pointed out that despite inflationary pressure due to oil prices, the improvement in the Euro-zone was expected to continue into the next quarter ad inflation was expected to conform with medium term objectives.
Following experts' forecasts, the ECB has revised its forecasts made in June upwards. The increase in GDP will be between 1.6 and 2.2% in 2004 and between 1.8 and 2.8% in 2005. Mr Trichet, however, remains cautious about these rises which he believes are not very telling but which all the same, confirm previous judgements made by the governing Council on economic upturn.
Although oil price increase do not justify rate adjustment in the Euro-zone, it is, nevertheless, leading to an upward revision of the ECB's inflation forecasts for 2004 and 2005. Forecasts for experts, published on Thursday, envisage a figure that is lower than the inflation band but a little higher than Eurosystem's estimates made in June, with a rate that fluctuates between 2.1% and 2.3% and between 1.3% and 2.3% in 2005. Mr Trichet considers that this should not prevent a return to inflation rates to below 2% in 2005, even if upward risks remain. Replying to a question , the Governors Council provided assurances that it had not discussed a possible decrease in taxes on oil products.