ECB's Nowotny says inflation to ease

VIENNA (Reuters) - European Central Bank (ECB) Governing Council member Ewald Nowotny said on Saturday he expected inflation to ease in the 15-nation euro zone.

"At the moment, the inflation rate is above our target. All forecasts show that inflation will drop," Nowotny said.

"This gave the ECB room to act to support growth and therefore we cut interest rates," he added, referring to the half percentage point rate cut which the ECB delivered earlier this month in coordination with other major central banks.

Speaking at an investor fair in Vienna, Nowotny said 2009 would be a difficult year and predicted a decline in global growth that would push down oil prices and inflation.

"I expect, based on the current situation, that the financial crisis will probably come to an end by the end of this year or the first quarter (of 2009). Then we will have stability," he said.

However, the crisis would have a delayed effect on the underlying economy, leading to lower growth and rising unemployment in 2009, he said.

(Reporting Christian Gutlederer; Writing by Noah Barkin, editing by Swaha Pattanaik)