ECB sees need to anchor inflation expectations
Inflation in the euro zone is not likely to drop back to the European Central Bank’s (ECB) target of just below 2 per cent either this year or next, ECB policy maker Axel Weber was quoted as saying on Thursday.
By Bloomberg |
BERLIN: Inflation in the euro zone is not likely to drop back to the European Central Bank���s (ECB) target of just below 2 per cent either this year or next, ECB policy maker Axel Weber was quoted as saying on Thursday. Inflation in the 15-country bloc is currently running at over twice that target at 4.1 per cent. In an interview with the Stuttgarter Zeitung, Weber said the ECB had to prevent current inflation expectations cementing themselves.
���We must prevent expectations forming in people���s minds that the inflation rate could remain as high as it is now in the medium term, and thereby be used as the bar for wage negotiations,��� he said. Weber said despite recent falls in in oil prices, inflation was expected to stay above the ECB���s comfort-zone for some time.
���We don���t expect the inflation rate in the euro area will fall back below our stability ceiling of just below 2 per cent this year or next,��� Weber said. ���We have a very gloomy inflation outlook. That makes it all the more important that we prevent second round effects.��� he added. Despite a worse-than-expected run of recent economic data, the ECB kept its key interest rate at 4.25 per cent last week.
���We must prevent expectations forming in people���s minds that the inflation rate could remain as high as it is now in the medium term, and thereby be used as the bar for wage negotiations,��� he said. Weber said despite recent falls in in oil prices, inflation was expected to stay above the ECB���s comfort-zone for some time.
���We don���t expect the inflation rate in the euro area will fall back below our stability ceiling of just below 2 per cent this year or next,��� Weber said. ���We have a very gloomy inflation outlook. That makes it all the more important that we prevent second round effects.��� he added. Despite a worse-than-expected run of recent economic data, the ECB kept its key interest rate at 4.25 per cent last week.
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