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ECB says oil prices a drag on inflation but a boost to growth

Falling oil prices will continue to support Europe's economic recovery but also exert a downward pressure on inflation, the European Central Bank said on Thursday, a potential headache for the bank as it tries to boost prices from anaemic levels. 

PHOTO: AFP

JUL 30, 20154:18 PM

[FRANKFURT] Falling oil prices will continue to support Europe's economic recovery but also exert a downward pressure on inflation, the European Central Bank said on Thursday, a potential headache for the bank as it tries to boost prices from anaemic levels.

The bank rolled out a 60 billion euro per month asset buying programme earlier this year, hoping to ward off the risk of deflation in the euro zone and to push inflation back towards its target of just under two per cent.

Price are only expected to rise towards the end of the year but the bank predicted a further pick up in 2016 and 2017, arguing that long term inflation expectations are in line with is target, despite the current low levels.

REUTERS