ECB cuts inflation forecast, raises growth estimate

[TALLINN,Estonia] The European Central Bank on Thursday lowered its inflation outlook to reflect a drop in oil prices but lifted economic growth projections across its forecast horizon through 2019.

The mixed outlook is likely to strengthen the case made by the ECB's more dovish rate-setters, who argue that price pressures in the euro zone are still too weak for the central bank to start preparing to unwind its monetary stimulus.

The ECB now sees inflation of 1.5 per cent in 2017 and 1.3 per cent in 2018, compared with its forecasts of 1.7 per cent and 1.6 per cent respectively from March. That is still well below its target of just under two per cent.

Growth this year was seen at 1.9 per cent versus an earlier 1.8 per cent.

The following are the ECB staff's new projections for inflation and GDP growth, with March's forecasts in brackets. The ECB updates its projections each quarter.

REUTERS