Top ECB official sees "mild recession" in eurozone

Activists of the Occupy Frankfurt movement have set up a fireplace near the Euro sculpture in front of the European Central Bank in Frankfurt, Germany Nov.3, 2011. The ECB announced to lower their key interest rate to 1.25 percent.
AP Photo/Michael Probst

(AP) FRANKFURT, Germany - A top European Central Bank official says the 17 countries that use the euro will probably see a "very mild recession" this year.

Benoit Coeure told Japan's Nikkei newspaper that growth was held back by scarce bank credit and necessary government budget-cutting because of problems with debt in some eurozone countries.

Coeure said that higher oil prices and taxes had led the bank to raise its outlook for inflation but that temporary "higher energy prices should not have a lasting impact on inflation."

The eurozone economy shrank 0.3 percent in the fourth quarter, and two quarters of negative growth is one definition of recession.

The ECB's staff projections foresee growth between minus 0.5 percent and plus 0.3 percent this year.