ECB raises euro zone 2006 inflation forecast to 2.1 pct from 1.9 pct
Thursday, December 1, 2005
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FRANKFURT (AFX) - The European Central Bank said it has raised its forecast for euro zone 2006 inflation to 2.1 pct from 1.9 pct previously
It maintained its forecast for 2005 inflation at 2.2 pct and said it expects 2.0 pct for 2007. The projections put inflation above the ECB's target of a rate below, but close to, 2.0 pct in both of the next two years and are therefore likely to have played a part in today's decision to raise interest rates
The ECB also raised its forecast for 2005 GDP growth to 1.4 pct from 1.3 pct, and its projection for 2006 growth to 1.9 pct from 1.8 pct. It said it expects growth at 1.9 pct in 2007. The forecasts are the mid-point of ranges given by ECB president Jean-Claude Trichet at today's ECB news conference
They are compiled by Eurosystem staff and provide one input to the ECB governing council's assessment of price developments and risks to price stability, but they do not play a dominant role in the council's monetary policy decisions, the central bank says
The ECB publishes its forecasts every three months. This is the first time it has published forecasts for 2007
The full ranges given by Trichet for the inflation forecasts were 2.1-2.3 pct in 2005, 1.6-2.6 pct in 2006 and 1.4-2.6 pct in 2007. The ranges for the growth forecasts were 1.2-1.6 pct in 2005 and 1.4-2.4 pct for both in 2006 and 2007
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