BRUSSELS, Dec 8: European Central Bank president Jean-Claude Trichet warned on Monday that the recession-hit eurozone faced several more tough months, in comments to the European Union parliament in Brussels.

“Global economic weakness and very sluggish domestic demand can be expected to persist in the last quarter of 2008 and in the next few quarters,” Trichet told EU lawmakers during his regular appearance at the parliament.

“Subsequently, a recovery should gradually take place supported by the fall in commodity prices and assuming that the external environment improves and financial tensions weaken,” Trichet added.

“As a whole average growth in 2009 could be between minus one per cent and zero per cent according to eurosystem staff,” he said, reiterating a forecast given on Thursday in the European Union capital.

The 15-nation eurozone economy contracted in the second and third quarters of 2008, plunging the zone of some 320 million people into its first technical recession.

The ECB slashed its lending rates on Thursday by 0.75 percentage points, its biggest margin ever, to 2.50 per cent.

But “given the massive change in the economic and inflation environment, the December cut does not look aggressive to us,” Bank of America senior economist Holger Schmieding said.

“We expect further rate cuts to 1.0 per cent or even lower in mid-2009,” he added.

Inflation has fallen sharply from a record 4.0 per cent in July to 2.1 per cent last month, and should continue to fall owing to so-called base effects stemming from the sharp rise in oil prices last year.

The ECB’s inflation target is just below 2.0 per cent.—AFP

Opinion

Editorial

A hasty retreat
Updated 28 Nov, 2024

A hasty retreat

Govt should not extend its campaign of violence against PTI and its leaders, thinking it now has the upper hand. Enough is enough.
Lebanon truce
28 Nov, 2024

Lebanon truce

WILL it hold? That is the question many in the Middle East and beyond will be asking after a 60-day ceasefire ...
MDR anomaly removed
28 Nov, 2024

MDR anomaly removed

THE State Bank’s decision to remove its minimum deposit rate requirement for conventional banks on deposits from...
Islamabad march
Updated 27 Nov, 2024

Islamabad march

WITH emotions running high, chaos closes in. As these words were being written, rumours and speculation were all...
Policing the internet
27 Nov, 2024

Policing the internet

IT is chilling to witness how Pakistan — a nation that embraced the freedoms of modern democracy, and the tech ...
Correcting sports priorities
27 Nov, 2024

Correcting sports priorities

IT has been a lingering battle that has cast a shadow over sports in Pakistan: who are the national sports...