ECB inflation survey backs case for stepping up stimulus again
The European Central Bank published updated economic projections by external analysts that back the case for more stimulus. Professional forecasters cut their inflation outlook for this year and next, according to the ECB's quarterly survey published on Friday. Analysts see inflation averaging 1.6 percent in 2018, a level that the Frankfurt-based central bank less than two months ago projected would be reached by 2017.
The ECB is struggling to lift inflation from close to zero toward its goal of just under 2 percent, despite an unprecedented quantitative-easing plan and record-low interest rates. On Thursday, President Mario Draghi held out the prospect of more stimulus as early as March as cooling Chinese growth sends global markets tumbling and exacerbates an oil crash that is damping consumer prices.
"We've plenty of instruments," the ECB president said on Friday at the World Economic Forum in Davos, Switzerland. "We have the determination, and the willingness and the capacity of the Governing Council to act and deploy these instruments."
The ECB says forecasters see inflation averaging 0.7 percent in 2016 and 1.4 percent in 2017, down from 1 percent and 1.5 percent, respectively. They cut their long-term outlook to 1.8 percent from 1.9 percent.