March 2, 2016 / 9:12 AM / 4 years ago

Euro zone inflation to turn positive in second half of 2016: ECB's Villeroy

The famous euro sign landmark is pictured outside the former headquarters of the European Central Bank (ECB) in Frankfurt, Germany, January 19, 2016. REUTERS/Kai Pfaffenbach

PARIS (Reuters) - Euro zone inflation will likely turn positive in the second half of the year but the European Central Bank’s battle against low price growth is not over, ECB governing council member Francois Villeroy de Galhau said on Wednesday.

Villeroy said the euro zone was not in deflation, though inflation had turned negative in February, dragged down by tumbling oil prices.

“Once oil prices stabilize, we should see inflation turn slightly positive in the second half of the year,” said Villeroy, who in his role as head of the Bank of France was speaking before the finance committee of France’s lower house of parliament.

Villeroy said the ECB’s governing council would be looking closely for signs whether low oil prices were feeding into the prices of other goods and services when it meets next week to see whether to step up its asset purchase program aimed at reviving inflation.

Reporting by Leigh Thomas; Editing by Andrew Callus

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