ECB Says Economic Recovery On Track, But Will Likely Be Uneven

FRANKFURT -(Dow Jones)- The euro zone's economic recovery is on track, but it is likely to be uneven, the European Central Bank said Thursday.

"The governing council expects real gross domestic product growth to remain moderate in 2010, owing to the ongoing process of balance-sheet adjustment in various sectors and the expectation that the low capacity utilization is likely to dampen investment and that consumption is being dampened by weak labour market prospects," the ECB said in its latest monthly bulletin.

Indications that the recovery stalled in the first quarter have already shifted economists' expectations and the ECB isn't expected to raise interest rates until late 2010, or later.

In light of ongoing uncertainty, the ECB said it will stick to its gradual approach in phasing out the extraordinary liquidity measures that had been launched to support the economy and the banking system.

But the central bank cautioned it didn't want to sustain its additional liquidity measures for longer than needed.

The bulletin echoes remarks by ECB President Jean-Claude Trichet at a press conference March 4 following the ECB's decision to leave its benchmark interest rate unchanged.

ECB Web site: http://www.ecb.int

-By Nina Koeppen, Dow Jones Newswires; +49 (0)69 2972 5509; nina.koeppen@ dowjones.com

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