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ECB: Eurozone Inflation Will Slow

European Central Bank expects inflation will settle back to its target level in about 18 months and the eurozone economy will return to moderate growth late this year.

FRANKFURT, Germany (AP) -- European Central Bank President Jean-Claude Trichet has underlined the ECB's expectations that inflation will settle back to its target level in about 18 months and that the euro zone economy will return to moderate growth late this year.

Trichet's comments came in a joint interview with Germany's Frankfurter Allgemeine Zeitung, the Irish Times and Portugal's Jornal de Negocios, posted Friday on the ECB's Web site.

"Our base line scenario is that we will have a trough in the profile of growth in the euro area in the second and third quarters of this year and, following this, a progressive return to ongoing moderate growth," Trichet said.

He also underscored the ECB's commitment to its main aim of fighting inflation, which has hit record levels this year as fuel, food and housing costs rise.

European Union statistics show that inflation in the 15-nation euro zone hit 4 percent in June -- the highest level since records started 16 years ago. That is double the ECB's inflation target of below or around 2 percent.

"We are there to tell households as well as enterprises, all social partners, that we will maintain price stability less than 2 percent, close to 2 percent -- in the medium term," Trichet said in the interview.

"Today, price setters and social partners must take into account that we will be back to price stability -- in line with our definition -- say over 18 months," he added.

Earlier this month, the ECB raised its benchmark interest rate from 4 percent to 4.25 percent, but left open where rates will go next.

Higher rates fight inflation, but can slow growth too.

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