Inflationary pressures in the euro zone have reached a 25-month high, suggesting the European Central Bank's loose monetary policy may fend off deflation, an indicator designed to predict cyclical trends showed.
The Eurozone Future Inflation Gauge (EZFIG), published by the Economic Cycle Research Institute, rose to 95.3 in May from 94.0 in April.
"Euro zone inflation ticked up in the latest reading," said Lakshman Achuthan, ECRI's chief operating officer. "With the EZFIG rising further in May to a 25-month high, euro zone inflation is likely to bottom out in the coming months."
Last month, the ECB launched a slew of measures to fend off the risk of deflation. The bank is not expected to do more than flesh out details on those at its meeting later on Thursday. [ECB/INT]
Euro zone inflation held steady at 0.5 percent in June, according to data released on Monday, stuck in the ECB's 'danger zone' of below 1 percent for the ninth month in a row.
(Reporting By Deepti Govind; Editing by Janet Lawrence)