BRUSSELS, Dec 8: European Central Bank president Jean-Claude Trichet warned on Monday that the recession-hit eurozone faced several more tough months, in comments to the European Union parliament in Brussels.

“Global economic weakness and very sluggish domestic demand can be expected to persist in the last quarter of 2008 and in the next few quarters,” Trichet told EU lawmakers during his regular appearance at the parliament.

“Subsequently, a recovery should gradually take place supported by the fall in commodity prices and assuming that the external environment improves and financial tensions weaken,” Trichet added.

“As a whole average growth in 2009 could be between minus one per cent and zero per cent according to eurosystem staff,” he said, reiterating a forecast given on Thursday in the European Union capital.

The 15-nation eurozone economy contracted in the second and third quarters of 2008, plunging the zone of some 320 million people into its first technical recession.

The ECB slashed its lending rates on Thursday by 0.75 percentage points, its biggest margin ever, to 2.50 per cent.

But “given the massive change in the economic and inflation environment, the December cut does not look aggressive to us,” Bank of America senior economist Holger Schmieding said.

“We expect further rate cuts to 1.0 per cent or even lower in mid-2009,” he added.

Inflation has fallen sharply from a record 4.0 per cent in July to 2.1 per cent last month, and should continue to fall owing to so-called base effects stemming from the sharp rise in oil prices last year.

The ECB’s inflation target is just below 2.0 per cent.—AFP