ECB policymakers upbeat on growth in first half 2008

FRANKFURT/LISBON (Reuters) - The euro-zone economy will likely hold up well in the first half of 2008, European Central Bank policymakers said on Wednesday.

ECB President Jean-Claude Trichet told Austrian media growth had been quite robust in the first months of the year, brushing off a downgrade to European Commission economic forecasts.

His assessment was echoed by Governing Council member Vitor Constancio, who said the euro-zone would not feel the pinch from financial market turmoil until late 2008, but this would then drag on growth into 2009.

Trichet gave no insight into expectations for the second half of the year, when most economists still forecast interest rate cuts, but said data had held up well so far.

"What we are observing in the first quarter of 2008 is that the economy was quite robust and in the first half of the year it will probably be reasonably resilient," he told Die Presse, Der Standard, Der Kurier and Salzburger Nachrichten, according to a transcript released by the ECB.

Economists polled by Reuters expect the ECB to keep rates on hold next week for the 11th month running in the face of high inflation, which policymakers have described as intolerable. But most expect the ECB to bow to a weakening growth outlook and cut rates to 3.5 percent by year's end.

The European Commission on Monday cut its outlook for growth in the 15-nation region to 1.7 percent this year and 1.5 percent in 2009. The International Monetary Fund sees growth of just 1.4 percent this year, which both Trichet and Constancio said might be too pessimistic.

Constancio said 2007's strong expansion would boost the economy this year, but agreed that 2009 growth would be slower.

"The United States had chances of a recession in the first part of the year, Europe didn't and continues to grow but will suffer the impact on the real economy towards the end of the year which will affect 2009," he told the Portuguese parliament.