ECB 'very cautious' about eurozone recovery

(FRANKFURT) - European Central Bank chief Mario Draghi on Thursday sought to temper hopes that the eurozone was about to rebound strongly, insisting that the nascent recovery remains extremely fragile.

"I am very, very cautious about recovery. I can't share the enthusiasm," Draghi told a news conference after the ECB held its key interest rates at their current record lows for the fourth consecutive month.

And the central bank "stands ready to act" should the situation suddenly deteriorate again in face of, for example, geo-political risks related to the situation in Syria, Draghi said.

"Certainly we are alert to geopolitical risks that may come out of the Syrian situation and economic risks that may derive from emerging markets situation," the central bank chief said.

Earlier, Draghi had revealed the ECB's latest updated growth and inflation forecasts for the 17 countries that share the euro.

And while the projections were fractionally more optimistic with regard to growth this year, they were more cautious about the outlook for next year.

Draghi said that the central bank's staff projections saw the eurozone economy shrinking by 0.4 percent this year and then growing by 1.0 percent next year.

In the bank's previous forecasts in June, the economy had been expected to contract by 0.6 percent in 2013 and grow by 1.1 percent in 2014.

Looking at price developments, area-wide inflation was projected to average 1.5 percent this year and then 1.3 percent in 2014, compared with the previous forecasts of 1.4 percent and 1.3 percent respectively.

Following six quarters of negative output growth, real gross domestic product (GDP) in the eurozone increased by 0.3 percent in the second quarter of 2013.

"Since then, survey-based confidence indicators up to August have improved further from low levels, overall confirming our previous expectations of a gradual recovery in economic activity," Draghi said.