It now expects growth of 1.1 percent this year, down sharply from its earlier forecast for 1.7 percent. Inflation is also expected to be lower, at 1.2 percent compared with 1.6 percent forecast earlier.
President Mario Draghi announced the reduction after Thursday's policy meeting, where the bank took several steps to support a weakening economy. The bank said it would not raise rates until the end of this year at the earliest. Previously, it had said that earliest rate hike would come in the fall. It also announced a new round of cheap loans for banks.
The European Central Bank is taking steps to support a weakening economy, pushing back the earliest date of interest rate increases and announcing a new round of cheap loans to banks.
The ECB said Thursday after its regular policy meeting that it would not raise rates until the end of this year at the earliest. Previously, it had said that earliest rate hike would come in the fall.
Financial markets are waiting to see what else bank President Mario Draghi will say at a news conference.
The ECB meanwhile kept on hold its key interest rates. Those are at zero for lending to banks and at minus 0.4 percent rate on deposits from commercial banks.