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Last Updated: Friday, 5 August 2005, 14:23 GMT 15:23 UK
ECB builds hopes for euro economy
Euro notes
Rates in the eurozone have been pegged at 2% for over two years
Eurozone rates are set at the correct level and the economy is heading in the right direction, says the president of the European Central Bank (ECB).

Jean-Claude Trichet added the latest economic surveys pointed to encouraging signs for a recovery in EU growth.

The ECB is predicting an upturn in the second half, but Mr Trichet would not be drawn on his exact forecasts.

He said the ECB had been right not to lower interest rates from 2% at its rate-setting meeting on Thursday.

Interest rates in the 12 nation eurozone have remained at the 2% level for more than two years.

"We feel, given our judgement on inflationary pressures and on price stability in the medium term, that these rates are exactly what we need," Mr Trichet said in a French radio interview.

Turnaround time

Jean-Claude Trichet said that for the past two months economic indicators had shown the eurozone heading in the desired direction.

Industrial orders in Germany - the eurozone's biggest economy - rose for the second month in a row, while its industrial sales enjoyed their biggest increase since January.

Most analysts believe the ECB will leave rates unchanged until well into next year as the central bank awaits solid evidence of an expanding economy.

Although the eurozone is suffering low growth, with many of its largest economies faltering, the ECB is keen to keep inflation in check.

"With price stability, your have confidence of consumers, of savers and investors," said Mr Trichet.

He also praised the introduction of the euro, saying the single currency had brought interest rates in the region to their lowest level in 50 or 100 years.


SEE ALSO:
Eurozone rates kept on hold at 2%
04 Aug 05 |  Business
IMF cuts eurozone growth forecast
03 Aug 05 |  Business
Euro weakens on rate cut rumours
24 Jun 05 |  Business


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