ECB survey sees eurozone inflation still below target
(FRANKFURT) - Eurozone inflation will remain below target in the next few years, a survey by the European Central Bank forecast on Thursday.
In its regular quarterly survey of professional forecasters, the ECB found that inflation in the 18 countries that share the euro was expected to reach an annual average 0.9 percent this year.
Inflation would then pick up to 1.3 percent in 2015 and 1.5 percent in 2016, the ECB said.
The new forecasts mark a downward revision from previous predictions.
At the time of its last SPF survey in February, forecasters had been pencilling in inflation of 1.1 percent for this year, 1.4 percent next year and 1.7 percent in 2016.
The ECB defines price stability as inflation rates close to but just below 2.0 percent.
However, area-wide inflation stood at just 0.7 percent in April, fuelling concerns that the eurozone is on the verge of deflation, a general and sustained fall in prices.
The respondents in the survey attributed the subdued inflation outlook to "favourable commodity price developments, the euro exchange rate, as well as the weak economic situation and labour market conditions."
Over the longer term, the rate of inflation could reach 1.8 percent, the survey found.
Last week, ECB chief Mario Draghi hinted that the central bank could cut its key interest rates -- currently at all-time lows -- still further in order to stave off deflation.
But any such moves would depend on the ECB's own inflation forecasts scheduled for release next month, Draghi said.
The SPF survey usually provides an indication of where the ECB's own forecasts are headed.
Turning to the growth outlook, the SPF survey predicted that area-wide gross domestic product (GDP) would return to growth of 1.1 percent in 2014 and 1.5 percent in 2015 after contracting last year.
Momentum would pick up to growth of 1.7 percent in 2016 and 1.8 percent in the longer term, the ECB survey found.
That confirms previous forecasts and "implies a pattern of a continuous, albeit gradual, strengthening in economic activity over the years ahead," the ECB said.