European Central Bank to cut Economic Forecast

Ewald Nowotny, European Central Bank Governing Council member, said the bank may cut its economic forecast next week. The bank will present its updated estimate next Thursday.

Nowotny said, "It's no secret that we are seeing somewhat of a downturn in the economy. Germany is no longer able to be a locomotive for growth".

On inflation and unemployment, Nowotny said the bank had expected increase in the euro zone, which has been in line as showed upturn. According to him, present year is better than previous year, but the increase is weaker than their expectations.

In the second quarter, recovery in the 18-nation euro area has stalled. According to European Union's statistics office in Luxembourg, the inflation in the area has slowed to 0.3% in the current month. On the other hand, the employment has stayed close to record.

Currently, European Central Bank forecasts the economic growth of 1% and inflation of 0.7% in 2014. On September 4, ECB will present new staff estimates.

On August 22, European Central Bank's president, Mario Draghi, said that investor bets on euro-area inflation in August "exhibited significant declines at all horizons". Earlier, he had said that decline in medium-term inflation outlook would become the reason of international asset purchases.

According to Nowotny, he has shared ECB president's concerns on the present economy yesterday.

Nowotny said that he is also concerned because they have not seen the expected upturn. They had expected rise in euro which they have, but it is not as per their expectations, he added.

A monthly survey of Bloomberg has stated that analysts estimate that ECB will seek a loan of about $395 in the first TLTRO round.