From left to right: the Vice-President of the European Central Bank, Lucas Papademos, the President of the European Central Bank, Jean-Claude Trichet, the Greek Minister of Finance, George Papakonstantinou and the Commissioner of Economic and Financial Affairs, Oll. Rehn at the Eurogroup meeting in Brussels, March 15, 2010.

Eurozone annual inflation is expected to rise to 1.5% in March 2010, according to a flash estimate issued today Eurostat, the statistics office of the European Union. It was 0.9% in February.

Computation of flash estimates: Eurozone inflation is measured by the Monetary Union Index of Consumer Prices (MUICP). To compute the MUICP flash estimates, Eurostat uses early price information relating to the reference month from Member States for which data are available as well as early information about energy prices.

The flash estimation procedure for the MUICP combines historical information with partial information on price developments in the most recent months to give a total index for the Eurozone. No detailed breakdown is available but Eurostat says experience has shown the procedure to be reliable (19 times exactly anticipating the inflation rate and 5 times differing by 0.1 over the last two years).

The official inflation target of the European Central Bank is "below but close to" 2%.

European Central Bank governing council member and Bundesbank president, Prof. Axel Weber, said in a newspaper interview last week that current interest rate levels are appropriate because Europe doesn't face the risk of inflation now.

Weber told Japan's Nikkei newspaper that the ECB will gradually unwind its emergency liquidity measures but made clear that these moves wouldn't signal changes in the Bank's interest rate policy.

He said he expects a 1.6% growth rate in Germany 2010 and a continued recovery in 2011, the Nikkei reported. However, the IMF this week cut its GDP (gross domestic product) forecast to 1.2% in 2010 from a projection of 1.5% made only last month.  In 2011, output is predicted to grow by 1.7%, the IMF said, compared with its February forecast of 1.9%.

Weber told the Nikkei newspaper that the Eurozone economic recovery this year is expected to be patchy, varying in pace between countries.

He said European countries must reduce their outstanding debt to improve their fiscal health, and that when their economies are doing well the governments should aim for a budget surplus, according to the newspaper.

The member states of the Eurozone are Belgium, Germany, Ireland, Greece, Spain, France, Italy, Cyprus, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland.