FRANKFURT (Reuters) - Euro zone inflation appears to have disconnected from growth and remains subdued even as the currency bloc’s economy expands rapidly, European Central Bank chief economist Peter Praet said.
“However, the ongoing economic expansion is expected to further contribute to a narrowing of the output and unemployment gaps, whatever their current levels,” Praet told a business forum in Frankfurt.
“Once the Governing Council judges that the three criteria for sustained adjustment – convergence, confidence and resilience – have been met, net asset purchases will expire, in line with our guidance,” Praet said, repeating the ECB’s long-standing policy message.
Until then, an ample degree of monetary stimulus remains necessary for underlying inflation pressures to build up, Praet argued.
Reporting by Balazs Koranyi; editing by David Stamp