AFP, Frankfurt :
Falling oil prices are weighing on the outlook for inflation in the euro area this year, but the European Central Bank’s stimulus measures and the gradual economic recovery will start to drive inflation higher again next year, an ECB survey showed on Friday.
According to the ECB’s regular quarterly survey of professional forecasters, eurozone inflation is expected to average 0.3 percent this year, but then pick up to 1.3 percent in 2017 and 1.6 percent in 2018, moving closer to the central bank’s target of just under two percent.
In a previous survey in January, forecasters had been pencilling in an inflation rate of 0.7 percent for 2016 and 1.4 percent for 2017.
“Respondents to the survey … have revised down their inflation expectations for this year by 0.4 percentage point. They reported that the downward revisions mainly reflected oil price developments since the previous quarterly survey, conducted in January,” the ECB wrote.
“However, respondents continue to expect a strong pick-up in inflation in the course of 2016 and in 2017 once the impact of the oil price decline subsides,” it continued.
The projected increase in inflation would be “shaped by the ongoing expansion of economic activity … and supported by the monetary policy stance,” the survey said.
The ECB sees an inflation rate of close to but just under 2.0 percent as conducive to healthy economic growth.
At a policy meeting on March 10, the ECB announced a new range of new policy moves aimed at driving up chronically weak inflation.
These included cutting interest rates to zero percent, beefing up its controversial asset purchase programme known as quantitative easing and making vast amounts of cheap loans available to banks.
Turning to the growth outlook for the 19 countries that share the euro, the survey saw a slight downward reduction in experts’ growth forecasts.
The rate of economic growth was forecast to increase gradually from 1.5 percent in 2016 to 1.7 percent by 2018.
Falling oil prices are weighing on the outlook for inflation in the euro area this year, but the European Central Bank’s stimulus measures and the gradual economic recovery will start to drive inflation higher again next year, an ECB survey showed on Friday.
According to the ECB’s regular quarterly survey of professional forecasters, eurozone inflation is expected to average 0.3 percent this year, but then pick up to 1.3 percent in 2017 and 1.6 percent in 2018, moving closer to the central bank’s target of just under two percent.
In a previous survey in January, forecasters had been pencilling in an inflation rate of 0.7 percent for 2016 and 1.4 percent for 2017.
“Respondents to the survey … have revised down their inflation expectations for this year by 0.4 percentage point. They reported that the downward revisions mainly reflected oil price developments since the previous quarterly survey, conducted in January,” the ECB wrote.
“However, respondents continue to expect a strong pick-up in inflation in the course of 2016 and in 2017 once the impact of the oil price decline subsides,” it continued.
The projected increase in inflation would be “shaped by the ongoing expansion of economic activity … and supported by the monetary policy stance,” the survey said.
The ECB sees an inflation rate of close to but just under 2.0 percent as conducive to healthy economic growth.
At a policy meeting on March 10, the ECB announced a new range of new policy moves aimed at driving up chronically weak inflation.
These included cutting interest rates to zero percent, beefing up its controversial asset purchase programme known as quantitative easing and making vast amounts of cheap loans available to banks.
Turning to the growth outlook for the 19 countries that share the euro, the survey saw a slight downward reduction in experts’ growth forecasts.
The rate of economic growth was forecast to increase gradually from 1.5 percent in 2016 to 1.7 percent by 2018.
