MNI: ECB Accounts: See Significant Growth Outlook Improvement

By Christian Vits

     FRANKFURT (MNI) - European Central Bank policymakers drew a very positive

picture for the economic development in the euro area at their most recent

policy meeting, held Dec 13/14.

     The ECB's chief economist Peter Praet underlined that incoming information

"indicated a significant improvement in the growth outlook and continued

economic expansion at a pace exceeding potential," the bank said in its latest

minutes, published Thursday. At the same time, "price pressures remained

subdued," the report added.

     Further ahead, the economic expansion and the associated "significant

absorption of economic slack" were expected to a gradual convergence of

inflation levels in line with the ECB's target over the medium term.

     Several observations were made on the apparent disconnect between

developments in the real economy and price dynamics, according to the minutes.

     "This disconnect appeared to have persisted or even increased over recent

months, as growth had repeatedly been stronger than expected in the euro area

and inflation dynamics had remained largely unchanged or surprised on the

downside," the ECB noted.

     However, "confidence was widely expressed that, ultimately, the further

absorption of slack should lead to upward wage and price pressures."

--MNI Frankfurt Bureau; +49 69 97782671; email: christian.vits@marketnews.com

[TOPICS: M$X$$$,MC$$$$,MT$$$$,M$$EC$]