FRANKFURT (Reuters) - Risks to euro zone growth are on the rise but the currency bloc will continue to expand slightly above what is considered its natural potential, European Central Bank board member Yves Mersch said on Wednesday.
“While risks to growth remain broadly balanced, those related to global factors, including the threat of increased protectionism, the finalization of the Brexit negotiations and vulnerabilities in emerging markets are gaining prominence,” Mersch said in Singapore.
“We expect the expansion to continue at a pace slightly above potential in the period ahead,” Mersch said in comments broadly consistent with the ECB’s recent policy statements.
While inflation is expected to keep on rising, much of the expected increase was based on the premise of “quite some” degree of monetary policy accommodation, Mersch said, a slight change from the bank’s previous wording, which called for an “ample degree” of accommodation.
Reporting by Balazs Koranyi; Editing by Maria Sheahan