FRANKFURT (Reuters) - The European Central Bank on Thursday lowered its forecasts for core inflation in the next two years, in a further sign that it expect prices pressures in the euro zone to remain muted despite the bloc’s brighter growth prospects.
Once the energy and food prices are excluded, the ECB now sees inflation at 1.4 percent in 2018 and 1.7 percent in 2019. This compares with the central bank’s March projections of 1.5 percent and 1.8 percent respectively.
For 2017, the ECB confirmed its previous core inflation forecast of 1.1 percent.
Earlier on Thursday, the ECB had also lowered its headline inflation outlook to reflect a drop in oil prices, leaving it well below its target of almost 2 percent through 2019.
The mixed outlook is likely to strengthen the case made by the ECB’s more dovish rate-setters, who argue that price pressures in the euro zone are still too weak for the central bank to start preparing to unwind its stimulus.
Reporting by Michael Nienaber; Editing by Francesco Canepa