FRANKFURT (Reuters) - Euro zone inflation could be faster in the coming years while long-term projections remain steady, the European Central Bank’s Survey of Professional Forecasters showed on Friday, underpinning the bank’s cautions optimism.
Headline inflation could be 1.5 percent this year and 1.7 percent next year, both 0.1 percentage point above projections in October, according to the survey of 56 forecasters, an important input in the ECB’s policy deliberations.
The ECB decided on Thursday to keep policy on hold as inflation pressure remains muted but argued that its confidence has strengthened that inflation would rise back to its target of just below 2 percent.
The firming euro could be the biggest obstacle in reaching the objective and ECB President Mario Draghi warned on Thursday that the bank could be forced to rethink its policy strategy if there was unwarranted firming in the exchange rate.
The survey also confirmed Draghi’s confidence in growth as the GDP projection for this year was raised to 2.3 percent from 1.9 percent three months ago. The 2019 growth outlook was lifted to 1.9 percent from 1.7 percent.
For more on the ECB’s survey, click on: here
Reporting by Balazs Koranyi; editing by Ralph Boulton