The European Central Bank (ECB) left interest rates on hold Thursday at their historic low of 1 per cent as Europe's economy edges it way towards recovery, according to dpa. At his press conference later Thursday, ECB chief Jean-Claude Trichet is expected announce that the bank has raised its economic growth forecasts for the 16-member eurozone amid signs that the recession could be starting to draw to an end. But underscoring the fragile state of the currency bloc's economy, Trichet is likely to indicate that the ECB is in no hurry to begin reversing the series of big liquidity measures it has taken to contain the economic crisis, which swept the region over the last 12 months. How and when to dismantle the anti-crisis fiscal stimulus plans launched by governments around the world to shield their economies from the steep global slowdown is to be a key item on the agenda at the weekend meeting in London of the Group of 20 finance ministers and central bankers. In the meantime, analysts believe the prospects of only tepid economic growth emerging in the coming months, combined with weak inflationary pressures, means that eurozone rates will remain at their current levels, possibly through to the middle of 2010 or even later. Set out in the bank's staff projections, the new growth forecasts follow the release of figures Wednesday by Eurostat, the European Union's statistics office, confirming that the eurozone's two biggest economies - Germany and France - climbed out of recession in the second quarter. This, in turn, prompted forecasts that the eurozone could exit recession in the third quarter after narrowly missing out on doing so in the three months to the end of the June. The eurozone contracted by 0.1 per cent in the second quarter after slumping by 2.5 per cent in the first three months of the year. Up until now, the ECB has been projecting negative growth in the currency bloc through to the middle of 2010. But analysts believe there are signs that the ECB will raise its growth projections, which currently shows a contraction of 4.6 per cent in 2009 and 0.3 per cent next year. Economic growth would then return to a positive track in 2010, analysts predict the ECB staff projections to show.
