14 Dec 2010

'Muted recovery' predicted for eurozone

7:42 am on 14 December 2010

The Organisation for Economic Co-operation and Development Economic says activity in countries using the euro has picked up but the recovery is likely to be muted.

It says countries using the euro must consolidate public finances even though this is likely to dampen economic growth in the near term, the BBC reports.

The OECD's report says as soon as risks of high inflation in the medium term emerge, the European Central Bank should withdraw stimulus measures.

ECB interest rates stand at 1%. The central bank's target for inflation is just below 2%.

The OECD forecasts annual economic growth of 1.5% to 2% over the coming two years.