The European Central Bank (ECB) has cut its forecast for eurozone growth for the next two years and has predicted a greater than expected increase in inflation for the same period. The ECB said that eurozone growth this year would be 1pc, down from the 1.6pc it had forecast earlier, and its 2004 growth projection was cut to 2pc from 2.4pc. The central bank has also changed its 2003 and 2004 forecasts for inflation and is now projecting 2003 inflation of 2pc compared with its December forecast of 1.8pc, and 2004 inflation of 1.5pc compared with the earlier forecast of 1.6pc.
"This downward revision of growth prospects for 2003 and 2004 seems to be the result of high uncertainty mainly associated with geopolitical tensions which are affecting the global economic and financial situation," the ECB said in its February monthly bulletin. //www.fxcentre.com