German business confidence edged higher this month as institutional investors and analysts expressed muted optimism for a recovery of the euro zone's biggest economy this year.
The ZEW institute's monthly index of expectations rose by 0.4 points to plus 36.3 points in March, having already risen sharply the previous month.
The percentage of respondents expecting the European Central Bank to raise interest rates in the next six months also increased slightly, although the majority still expected monetary policy to remain unchanged over the period.
Those expecting inflation to increase (20.1 per cent) outweighed those expecting easing price pressures (18.1 per cent) by 2 per cent, up 9.2 percentage points on the month.
That was higher than in December, but much less than a level of 22.1 points in November. Those expecting inflation to remain unchanged around current levels in the next half year rose 1.4 points to 61.8 per cent.
Respondents expecting the ECB to increase interest rates rose 2.8 points to 27.4 per cent, the highest level since December.
However, more than two-thirds of respondents expected rates to remain on hold at their current 2 per cent.
Separately, the survey showed investors believed the dollar had the potential to fall further against the euro and that oil prices were likely to ease in coming months.