PARIS — The European Central Bank upgraded its growth outlook for the euro zone on Thursday, but sought to temper optimism by warning that the nascent economic recovery would be patchy.
In another note of caution, the central bank president, Jean-Claude Trichet, also refused to specify when the bank might begin unwinding the extraordinary steps it took over the last year to support Europe’s banking sector.
“Today it is not the time to exit, but we are alert, we are permanently looking at the situation,” Mr. Trichet said at a news conference. “We have no pre-commitment in any respect.”
The bank left its benchmark interest rate at 1 percent, where it has been since May, after a meeting of its governing council in Frankfurt. Mr. Trichet told a news conference that the decision had been unanimous, that current borrowing costs were “appropriate” and that “price developments are expected to remain subdued.”
Over all, analysts concluded that the bank was in no hurry to reverse the measures it had taken — including deep interest rate cuts and efforts to inject more cash into the system — to stimulate the economy.
Still, on the same day that the Organization for Economic Cooperation and Development gave a brighter outlookfor the world’s major economies, the central bank lifted its own growth projections as well.
“There are increasing signs of stabilization in economic activity in the euro area and elsewhere,” Mr. Trichet said. He cited the inventory cycle, a pick-up in exports and the impact of fiscal and monetary stimulus.
The central bank now expects growth of 0.2 percent in the euro area next year. In June, it estimated a decline of 0.3 percent. The new figure is relatively conservative, compared with a market consensus of 0.8 percent.
Mr. Trichet did not exclude the possibility that growth could turn positive before mid-2010. But he was careful to say the recovery would be “very gradual” and “rather uneven,” because some factors supporting growth were temporary and some banks and businesses were still repairing their balance sheets.
“Prudence and caution are of the essence in the present situation,” he said.
Nick Kounis, the chief European economist at Fortis Bank in Amsterdam, said the day the central bank started to raise interest rates again still appeared “some way off.”
“This is clearly a central bank that remains very cautious, and as a result, it wants to keep market interest rate expectations low,” he said.
The central bank also slightly increased its inflation projections, based mainly on rising energy prices. It gave an inflation forecast of 0.4 percent this year and 1.2 percent next year. It aims to keep inflation at a rate below but close to 2 percent.
The sluggish rebound will serve to restrain price increases, Mr. Trichet said.
Hours earlier, the O.E.C.D., a Paris-based research institute, published improved economic forecasts for the industrialized economies, suggesting that the global recession might end as early as the third quarter.
It forecast that growth across the Group of 7 countries would contract 3.7 percent this year, less than the 4.1 percent decline projected in June. It offered slightly improved outlooks for Japan and the euro area, an unchanged projection for the United States and a gloomier assessment of Britain.
Since last month, data from the euro area has mostly been positive.
On Thursday, a release from Markit Economics showed that Europe’s manufacturing and service industries ended the longest streak of contraction on record in August. A composite index of both industries rose to 50.4 in August, from 47 the previous month. The index is based on a survey of purchasing managers and a reading below 50 indicates a contraction.
This week, data showed the euro-zone economy shrank 0.1 percent in the second quarter from the first, a significant improvement over the record 2.5 percent plunge in the first three months of 2009.
Still, there has been no improvement in the labor market. On Thursday, the French statistics office Insee reported that unemployment rose to 9.5 percent in the second quarter, from 8.9 percent during the previous three months.
As part of its support for banks, the central bank has introduced so-called nonstandard measures, including one-year unlimited liquidity auctions. In June, 442 billion euros, or $630 billion, of cash was taken up by banks; the next auction is scheduled for Sept. 29.
Mr. Trichet called for further efforts from governments to strengthen the financial system.
“The worst possible attitude,” now that financial markets are functioning better and prices are recovering, would be to return to “business as usual.”
The central bank confirmed, as expected, that the rate on that refinancing operation would remain 1 percent, rather than being raised. Analysts said this also showed the bank was in no hurry to unwind its liquidity support for banks.
Separately, the Swedish central bank, the Riksbank, left its benchmark interest rate unchanged on Thursday, at 0.25 percent, while maintaining the view that borrowing costs would not rise before the third quarter of 2010 .
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