European Central Bank cuts inflation forecast

Associated Press
European Central Bank keeps rates unchanged

A man looks at a display in a shoe store in Madrid, Spain, Wednesday, Dec. 4, 2013. Further signs emerged Wednesday to show that the paltry economic recovery in the 17-country eurozone is losing steam. Figures from Eurostat, the EU's statistics office, showed retail sales across the region fell a monthly 0.2 percent in October. That followed a 0.6 percent decline in September and confounded expectations in the markets for a modest increase. Luckily for the eurozone as a whole, its powerhouse economy, Germany, is growing strongly. Tts PMI reading of 55.4 was a 29-month high. Spain was the other bright spot as the eurozone's fourth-largest economy continues to exhibit signs of life in the face of its debt problems and a sky-high unemployment rate of around 26 percent.(AP Photo/Paul White)

FRANKFURT, Germany (AP) -- The European Central Bank has cut its inflation forecast for next year, another sign of how weak the economic recovery is in the 17 countries that use the euro.

The ECB cut the forecast to 1.1 percent from the previous 1.3 percent forecast. The ECB aims to have inflation of just under 2 percent.

The inflation figure is significant because it indicates demand for goods from consumers will be weak. Inflation for the eurozone as a whole was only 0.9 percent in November on an annual basis.

The ECB left its benchmark interest rate unchanged Thursday at 0.25 percent even though economic growth slowed to a bare 0.1 percent in the third quarter.