10 January 2003, 09:32  Eurozone will not contract: Duisenberg

The president of the European Central Bank (ECB) said he does not believe that the eurozone economy will contract in the current quarter Speaking following the bank's decision to leave rates on hold at 2.75pc, Wim Duisenberg said a gradual increase in real GDP growth rates to levels close to potential later in the year "remains the main scenario" "It is not our expectation that there will be a contraction. We expect very moderate growth and slow resumption of growth throughout the year, including the first quarter," he added. Earlier today, the European Commission upgraded its growth forecasts slightly, but continues to forecast a possible contraction
Duisenberg also admitted that the recent appreciation of the euro had a similar effect on the economy as monetary policy, acknowledging that some of the impact of last month's rate cut had been negated. The bank is expected to lower rates again, probably by 25 basis points, before the end of the first quarter He declined to comment on Bank of France governor Jean Claude Trichet, who was expected to succeed Duisenberg but whose trial on fraud charges may scupper those ambitions.//www.fxcentre.com

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