Eurozone inflation outlook brighter: ECB survey

(FRANKFURT) - The inflation outlook for the euro area is improving as growth picks up and the effects of the European Central Bank's policy measures feed through into the economy, an ECB survey showed on Friday.

According to the ECB's regular quarterly survey of professional forecasters, eurozone inflation is expected to average 0.2 percent this year and then pick up to 1.3 percent in 2016 and 1.6 percent in 2017, moving closer to the central bank's target of just under two percent.

The 2015 and 2016 figures represent a slight upward revision from the previous survey in the second quarter.

Survey respondents "see a number of factors that support the strong pick-up in inflation in 2016 and 2017," the ECB said.

"The main factors include the confirmation of ongoing, albeit moderate, growth in economic activity, monetary policy measures, exchange rate developments and base effects from past oil price developments," it explained.

However, respondents expected the pick-up in economic activity to exert only slowly increasing pressure on prices, "as the slack remaining in the euro area economy will be removed only gradually," the ECB continued.

Structural reform efforts and ongoing adjustments and rebalancing in some euro area countries was also expected to help keep a lid on upward price pressures.

Already on Thursday, ECB chief Mario Draghi had said that the central bank's raft of different policy measures, including a much-contested scheme of buying 1.1 trillion euros ($1.2 trillion) worth of public sector and government bonds, were helping to fuel economic recovery.

Turning to the growth outlook for the 19 countries that share the euro, the survey saw largely no change in experts' growth forecasts.

"The outlook for economic activity was largely unchanged from the previous round," the ECB said, with real gross domestic product projected to expand by 1.4 percent in 2015, 1.8 percent in 2016 and 1.8 percent again in 2017.

Only the 2016 forecast was revised upwards slightly from 1.7 percent in the previous survey.

"The upward path is explained by the ECB's accommodative monetary policy and the low oil prices," the central bank said.

Many respondents expected the ECB's quantitative easing "to have an upward effect, both via the exchange rate, boosting extra-euro area demand, and thanks to low interest rates, allowing for improved credit market conditions," it explained.

Low oil prices would contribute positively to private consumption thanks to households' higher disposable income.

The ECB Survey of Professional Forecasters (SPF) collects the views of experts affiliated with financial or non-financial institutions based within the European Union.

While the ECB insists that the survey results do not represent the views of its staff and decision-making bodies, the SPF survey usually provides an indication of where the ECB's own forecasts -- scheduled for release on September 3 -- are headed.

The latest survey was conducted between June 30 and July 6 and there were 54 respondents, the ECB said.