(by Mark Riley)

The European Central Bank considers “strong vigilance” to absolutely important in guaranteeing inflation drop as soon as next year down to 2%.

This can be fulfilled because of eurozone economic recovery and the growth of oil prices. “While the economic analysis indicates that prospects are consistent with price stability being maintained over the medium term, a number of upside risks need to be carefully monitored,” the ECB said in its September monthly report.

Consumer prices went higher within oil surge of 34%. Jean-Claude Trichet, the bank’s President, said that the bank raised its forecasts for economic growth and inflation “slightly”.

This made investors think the bank will raise its benchmark lending rate at the end of the year.

ECB forecasts confirm inflation will average about 2.2% this year before calming to 1.8% in 2005. Economic growth will show 1.9% this year and 2.3% in 2005. It has left its benchmark interest rate at a six-decade low 2%.