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European Central Bank says economy will recover later in 2013

European Central Bank says economy will recover later in 2013

The European Central Bank’s monthly bulletin said the Euro-zone economy will begin a gradual recovery later in 2013, and inflation is expected to fall below 2% this year. However, the ECB further said that risks to the economy remain to the downside.

The economy is expected to recover because of the accommodative monetary policy and significantly improved financial market confidence, and reduced fragmentation. The ECB said further weakness is expected to extend into this year before the recovery begins. The central bank also expects foreign demand to support export growth.

Meanwhile, the Euro edged higher against the U.S. dollar today, as the single currency stabilized after a European Central Bank policymaker said yesterday that the euro exchange rate was “not a matter of major concern”. ECB governing council member Ewald Nowotny said that the situation in the euro zone had stabilized and indicated that the bank was not concerned over the euro’s recent gains. The U.S. was to produce official data on building permits and housing starts later Thursday, in addition to the weekly government report on initial jobless claims and data on manufacturing activity in Philadelphia.

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