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MNI BRIEF: Eurozone Risks Recession, ECB Says

(MNI) London

A eurozone recession remains possible "as an already weak economic outlook deteriorates," the European Central Bank said in its Financial Stability Review on Wednesday.

Downward revisions to forecasts and negative economic surprises confirm a weak economic outlook with "substantial downside risks," the report said. The September round of ECB/Eurosystem staff macroeconomic projections have been revised downwards for several quarters in a row, together with other official and private sector forecasts, it noted. December forecasts will be published alongside the next policy decision, as policymakers contend with both slowing growth and decelerating, but still above-target inflation. (MNI SOURCES: Market Pricing For Cut Prompts ECB Jawboning)

A worsening global environment, tighter financial conditions, lower aggregate demand and lower credit supply will weigh on the economy in coming quarters, adding to weak foreign demand and receding fiscal support, it said.

ECB President Christine Lagarde noted on Tuesday that the Governing Council must be aware of growth concerns, but remain vigilant regarding upward pressures on prices.

MNI London Bureau | +44 203-865-3812 |
MNI London Bureau | +44 203-865-3812 |

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