The Business Times

ECB's Draghi concern about some impacts of lower oil price on eurozone economy

Published Thu, Dec 4, 2014 · 02:31 PM

[FRANKFURT] European Central Bank President Mario Draghi said on Thursday the falling price of oil would have mixed impact on the eurozone, boosting the economy by removing costs but also dragging down already-weak inflation.

He expressed concern that the lower price might become"embedded" in lower wages.

The estimate for the direct and indirect impact of falling oil in inflation was 0.4 per cent next year and 0.1 per cent the year after.

"Oil prices have an obvious direct impact on the price of energy and on that ground, the effect is unambiguously positive," Mr Draghi told a news conference.

But he said there were less positive effects on inflation. "It could alter the profile of inflation rates over the coming months, especially the next few months," he said.

Eurozone inflation is well below the ECB's target and has promoted expectations of quantitative easing - or sovereign bond buying - early next year.


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