The ECB is sticking with its 2004 forecasts

The ECB's predicted growth range for this year is now 0.2-0.6%, down from the previous 0.4-1%.

But the bank left its 2004 figure at 1.1-2.1%, with 1.9-2.9% in 2005.

At the same time, it has predicted a slight increase in inflation, but not enough to warrant concern over the present low level of interest rates.

The ECB's main interest rate has been at 2% since June.

Ups and downs

The International Monetary Fund (IMF) currently predicts that the eurozone will grow by 1.9% next year, towards the top end of the ECB's own forecasts.

But IMF chief economist Raghuram Rajan, admitting that recovery had been weaker than the Fund had expected, said that the 1.9% figure might not be achieved.

As far as the ECB is concerned, one important factor will be inflation, which it has long predicted will finally drop below the 2% target level next year.

These latest figures, however, indicate that this may not happen in 2004 - something that, in turn, may argue for a rise in interest rates.

But the ECB was at pains to suggest that there was little cause for alarm.

"The economic recovery in the euro area has started and confidence has strengthened further," it said.