Executive Board member Benoit Coeure said euro-area inflation will converge “only very gradually” toward the European Central Bank’s goal, justifying the need to continue providing stimulus.
Drawing a comparison with the U.S., where he noted that some fund managers anticipate an upside risk to price gains, the Executive Board member said “we see no such inflation tail risks at the current juncture.” He also said there is no concrete evidence that financial markets are starting to doubt the sustainability of the euro area’s economic expansion, and that investors aren’t questioning the ability of central banks to deliver on their inflation goals.
“An ample degree of monetary stimulus remains necessary for underlying inflation pressures to continue to build up,” Coeure, who heads the ECB’s market operations, said in a speech in Dublin. “We expect the ECB’s key interest rates to remain at their present levels for an extended period of time, and well past the horizon of our net asset purchases.”
The comments came just before data showed inflation in the currency bloc slowed to 1.3 percent at the start of the year, down from 1.4 percent in December and well short of the medium-term goal of just under 2 percent.
via Bloomberg
