FRANKFURT, July 9 (Reuters) - Inflation risks in the euro zone are broadly balanced, the European Central Bank said in its monthly bulletin on Thursday.
Upside risks to inflation come from higher than expected commodity prices and rises in indirect taxes, the central bank said, and added downside risks come from the outlook for economic activity.
"Indicators of inflation expectations over the medium to longer term remain firmly anchored in line with the Governing Council's aim of keeping inflation rates below, but close to, 2 percent over the medium term," the ECB said.
The ECB said it expected the current period of extremely low or negative inflation rates to be short-lived.
The editorial in the bulletin was a close repeat of the statement read by President Jean-Claude Trichet last week, after the ECB kept interest rates at 1.0 percent.
The euro zone economy is expected to recover gradually and start posting positive quarterly growth rates by mid-2010, the editorial said, adding risks to the economic outlook are also balanced.
Current ECB interest rates at 1 percent remain appropriate, the editorial also said. (Reporting by Sakari Suoninen; editing by Chris Pizzey)