ECB hikes growth, inflation forecasts

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The European Central Bank on Thursday raised its growth and inflation forecasts for the 16-nation eurozone, with the economy now expected to expand 1.6 percent this year and 1.4 percent in 2011.

In June, the ECB had forecast growth at 1.0 percent in 2010 and 1.2 percent in 2012.

Earlier Thursday, the European Union reported second quarter eurozone growth of 1.0 percent, compared to quarter-on-quarter growth of 0.4 percent in the United States and 0.1 percent in Japan.

The ECB also revised its inflation forecasts for the eurozone to 1.6 percent in 2010, from 1.5 percent previously, and to 1.7 percent in 2011, from 1.6 percent.

The new estimates remained well below the ECB's medium-term inflation target of just under 2.0 percent.

ECB policymakers meanwhile left the bank's benchmark interest rate a record low 1.0 percent, as was widely expected.

© 2010 AFP

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