Top central bankers said today Europe was set to outpace the US economy this year but insisted the outlook for the world's top economy was not as bleak as many had feared.
Bank of England Governor Sir Edward George said after chairing a regular session of central bankers from major economies that a widely expected slowdown in the US economy now looked less dramatic than expected only a few months ago.
"After a couple of bumpy quarters...(the prospect) is that the United States would begin to pick up again in the second half," Mr George said.
His remarks helped lift the dollar - already strong after firm US payrolls data on Friday diminished fears of a sharp US slowdown - to session highs against the euro, sterling and the Swiss franc.
He cited stronger-than-expected growth figures for the final quarter of 2000, unexpectedly strong US employment data and the beneficial effects of drastic cuts in short term interest rates by the US Federal Reserve earlier this year.
Mr George cautioned that the US economy, now in its longest uninterrupted period of expansion, was not quite over the hump. Risks to the forecast of a pickup in growth included recent weakness in US stock prices as well as a continued lull in consumer confidence.
He said it was too soon to declare victory and cautioned. While growth in the United States was still expected to slip to about 2.5 per cent this year, Mr George said the euro zone economies should see growth of some three per cent while inflation should remain muted.