FRANKFURT (Reuters) - The European Central Bank raised its 2017 inflation projection on Thursday to reflect higher oil prices and slightly lifted most of its other growth and inflation forecasts, but predicted price growth will remain below its target through 2019. Brent crude LCOc1 is trading 12 percent higher than the ECB assumed in its last forecasts in December. That helped push headline inflation to 2 percent in February, a touch above the euro zone central bank’s target of close to, but below, 2 percent.
The ECB now sees inflation of 1.7 percent in 2017, compared with a forecast of 1.3 percent in December.
The ECB expects the inflation spike to be temporary, however, predicting price growth will slow later this year as the rise in oil prices is knocked out of base figures.
The following are the ECB staff’s new projections for inflation and GDP growth, with December’s forecasts in brackets. The ECB updates its projections each quarter.
GDP growth 1.8 (1.7) 1.7 (1.6) 1.6 (1.6)
Inflation 1.7 (1.3) 1.6 (1.5) 1.7 (1.7)
Reporting by Balazs Koranyi; Editing by Catherine Evans