The European Central Bank (ECB) has left eurozone interest rates on hold at 2%, and has upgraded its economic growth forecasts.
The eurozone's recovery is looking fragile
ECB President Jean-Claude Trichet said the bank expected the eurozone to grow by 1.6%-2.2% this year, up from its previous forecast of 1.4%-2%.
For 2005, the ECB forecast a growth rate of 1.8%-2.8%, compared with the previous 1.7%-2.7% estimate.
The growth upgrade comes despite a recent 30% surge in oil prices.
Some economists fear that higher energy costs could dent growth just as the eurozone's biggest economies appear to be emerging from a period of near-stagnation.
But Mr Trichet moved to dispel such concerns, saying the ECB expected the recovery "to continue and become more broadly based over the coming quarters."
However, the ECB acknowledged that the oil price surge could have an impact on consumer prices, raising its 2004 inflation forecast to 2.1%-2.3%, compared with a previous forecast of 1.9%-2.3%.
The inflation outlook for 2005 was raised to 1.3%-2.3%, up from 1.1%-2.3% in the ECB's previous forecast.
The ECB's decision to leave rates on hold at 2%, a record low, had been widely expected in the financial markets.
It has now left borrowing costs unchanged for 15 months, in contrast to its counterparts in the US and the UK.
The Bank of England has put up rates five times since November last year, while the US Federal Reserve has done so twice since June.