The European Central Bank said there is not yet any sign that a sustained economic recovery has started in the euro zone. The ECB acknowledged in its July monthly bulletin that recent business confidence indicators have shown a slight improvement. But it added: "There are no signs as yet that a more sustained recovery in economic activity has already started." Growth has remained subdued as high and rising oil prices have weighed on demand and confidence, and second quarter GDP growth is likely to be below the 0.5 pct first quarter rate, it said. The ECB said survey indicators posted significant declines up to May, and this points to subdued second quarter growth, despite some tentative positive signs in June survey data. And risks to the economic growth outlook remain tilted to the the downside as a result of the persistence of high oil prices, low euro zone economic confidence and global imbalances, it said. However, in the longer run, there are still reasons to expect a gradual improvement in euro zone economic activity, it said. Growth should eventually be supported by increases in investment and consumption and the impact of greater price competitiveness on exports, it said. The ECB reiterated that it sees current interest rates as appropriate given the present inflation outlook. It said inflation may not fall below 2 pct this year as a result of the latest rise in oil prices, but domestic inflation pressures remain under control. Oil price developments "imply some upward revisions to the main scenario for price developments", it said. The ECB last month forecast that euro zone inflation would average 2.0 pct this year and 1.6 pct next year. The bulletin editorial closely matches ECB president Jean-Claude Trichet's introductory statement to last week's ECB news conference.