The President of the European Central Bank, Mario Draghi, on Thursday said the eurozone is showing “signs of stabilization.” (Mario Vedder/dapd/Associated Press)

ECB head Mario Draghi said the eurozone economy was showing “signs of stabilization.” He also made his outlook for the economy slightly less pessimistic, dropping the word “tentative” from his remarks to reporters that he used to describe the signs in last month’s assessment.

He also said that Eurozone inflation was likely to stay above the bank’s goal of just under two per cent for all of this year. Last month the annual rate crept up to 2.7 per cent for the eurozone.

Higher inflation would argue against further rate cuts, which can worsen inflation if done at the wrong time. Draghi said keeping inflation expectations under control was “of the essence.”

Market concern over some debt-stricken European governments such as Spain and Italy has eased recently, and investors and analysts are waiting to see whether ECB president Mario Draghi gives a slightly more upbeat assessment of prospects for growth.

Recent indicators suggest the current economic slowdown across Europe might not be too deep. That would give the bank a reason to hold off on more cuts.

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