ECB Seen Firmly on Hold, Set to Raise Inflation Forecast

Keeping interest rates firmly on hold, the European Central Bank will probably raise growth and inflation forecasts on Thursday, a rare positive step even as it emphasises persistent negative risks and a readiness to provide more stimulus.

The ECB is buying assets to the tune of 1.74 trillion euros (£1.35 trillion) to lift growth and boost inflation, which has been stuck in negative territory for months, raising the risk the 19-member currency bloc sinks into a deflation spiral.

With oil prices almost doubling since early January, the ECB will nudge up its inflation projections, breaking a cycle of having to cut forecasts quarter after quarter, and supporting ECB President Mario Draghi’s call for patience with measures already taken.

Reuters

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