The European Union statistics agency said Thursday that 12 nations using the euro saw accelerated economic growth in the first quarter. The acceleration was listed at 0.6 percent and suggests an interest rate increase by the European Central Bank may be forthcoming.The growth was a boost from last quarters' 0.3 percent growth, which was attributed largely to the non-expansion of Germany, the region's largest economy. However, both the euro area and the entire 25 states of the European Union saw growth speed up at the beginning of 2006, increasing by 0.6 percent, Eurostat said.
In a monthly bulletin, the European Central Bank said that inflation was likely to remain above its guideline of 2 percent in the short term. It also said that indirect taxes and the added effect of high oil prices are likely to "significantly" affect inflation in 2007.
Many experts believe the bank will raise interest rates at itsnext meeting, scheduled for June 8. Most analysts predict a quarter percentage point increase. The key refinancing rate now stands at 2.5 percent.
This quarter, Germany grew 0.4 percent compared with the previous quarter, according to an Associated Press report.