Eurozone inflation forecasts rise in ECB survey
Inflation in the eurozone will pick up in future but remain driven by volatile food and energy prices, a quarterly survey of forecasters by the European Central Bank suggested Friday.
In 2017, the economists predict an average inflation rate of of 1.6 percent -- up from a previous forecast of 1.4 percent -- in the 19-nation single currency area, followed by 1.5 percent in 2018 and 1.7 percent in 2019.
Further out, price growth should reach 1.8 percent by 2021, around the ECB's target of close to, but below 2.0 percent per year -- believed to be the most favourable level for growth.
The analysts' expectations vary only slightly from the central bank's internal estimates of 1.7 percent in 2017, 1.6 percent in 2018 and 1.7 percent in 2019.
Policymakers will have new staff inflation forecasts available at their next monetary policy meeting in June.
Many observers expect president Mario Draghi to use his press conference following that gathering to hint at a gradual exit from mass bond-buying next year.
Tougher voices on the ECB's governing council are already pushing for an end to the Frankfurt institution's 60-billion-euro ($65-billion) per month bond-buying programme and a rise in historic low interest rates.
The central bank's interventions are designed to pump money through the financial system and encourage lending to businesses and households, powering the real economy towards growth and stimulating inflation.
Draghi and his supporters argue that headline inflation is being pushed up by price changes in volatile items like food and energy, saying that pressure from other sources such as higher wages remains weak.
"Core" inflation excluding the fastest-changing elements will take longer to approach the target, the president believes -- meaning that the ECB's support will be needed for longer.
The survey on Friday suggested that core inflation will reach 1.1 percent this year, followed by 1.3 percent next year and 1.5 percent in 2019 -- still well short of the ECB's goal.
The forecasters were more optimistic than the central bank, which currently projects core inflation of 0.9 percent this year.
On Thursday, the ECB left its bond-buying programme and interest rates unchanged, and Draghi reiterated in a press conference that present levels of inflation remain dependent on the central bank's interventions.
The central bank chief did acknowledge that economic growth was "increasingly solid" in the eurozone.
In the survey on Friday, economists lifted their expectations for growth in the single currency area to 1.7 percent, up from 1.5 percent in the last survey.
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