Central bank worried about ‘too prolonged’ inflation
The ECB Council is “unanimous in its commitment to recur to unconventional tools” against the risk of a prolonged period of low inflation.
“The slack in the euro area economy, as measured by different types of indicator, is still considerable and is likely to dampen upward pressure on inflation”, the ECB said in its Monthly Bulletin.
The ECB’s Governing Council is unanimously behind President Mario Draghi’s decision to use unconventional measures to stop low inflation threatening growth in the eurozone. Even so, recent comments show officials haven’t yet agreed on which tools to use, setting them up for discussions on whether to take an unprecedented leap into quantitative easing or rely on smaller and more-targeted initiatives.
“At 11.9 % unemployment in the euro area is stabilizing” (and remains high) but “inflation will increase gradually in 2015 while hover around the ECB’s target of 2.0% by the end of 2016” , Draghi said, “and by holding off from any action until June meeting, policy makers have a chance to see if price gains pick up as the economic recovery gathers speed”.
The ECB will release its own updated economic projections at the June meeting.