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ECB raises GDP forecasts, sees zero inflation in 2015

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The European Central Bank raised its economic growth forecasts on Thursday but cut its inflation projection for 2015 to zero, reflecting the impact of last year's sharp drop in oil prices and euro weakness.

[NICOSIA] The European Central Bank raised its economic growth forecasts on Thursday but cut its inflation projection for 2015 to zero, reflecting the impact of last year's sharp drop in oil prices and euro weakness.

Its last outlook, in December, was finalised before crude oil prices bottomed out.

"The risks surrounding the economic outlook for the euro area remain on the downside but have diminished following recent monetary policy decisions and the fall in oil prices," ECB President Mario Draghi told a news conference after a regular policy meeting on Thursday.

The bank now sees GDP growth accelerating to 1.5 per cent in 2015 from last year's 0.9 per cent and ahead of its December forecast for 1.0 per cent. It foresees GDP growth of 1.9 per cent in 2016, higher than December's forecast, and of 2.1 per cent in 2017.

It cut its 2015 inflation forecast to zero per cent from 0.7 per cent seen in December and raised the 2016 forecast to 1.5 per cent from December's 1.3 per cent. It sees inflation rising to 1.8 per cent - near the ECB's target of just under 2 per cent - in 2017.

Mr Draghi said the adjustments reflected the impact of lower oil prices, the weaker euro and the effects of the ECB's recent monetary policy measures.

The following are the bank's new forecasts for growth and inflation. Previous figures are in brackets. All figures are per cent.

REUTERS