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Euro zone inflation may rise quicker than thought in 2017: ECB survey

[FRANKFURT] Euro zone inflation could accelerate more quickly than earlier thought but underlying price growth, a key measure watched by policymakers, will only rise slowly, the European Central Bank's Survey of Professional Forecasters showed on Friday.

The ECB kept its abundant stimulus measures in place on Thursday, arguing that inflation excluding energy and food products has yet to show a convincing upward trend.

This suggests that even if growth accelerates, any removal of stimulus will be gradual, lasting years.

Headline inflation in the 19 member currency bloc could hit 1.6 per cent this year, above a previous forecast for 1.4 per cent, then rise to 1.7 per cent by 2019, above the 1.6 per cent projection from three months ago, the survey based on 56 responses showed.

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Expectations for inflation in 2021 are meanwhile holding steady at 1.8 percent, just at the ECB's inflation objective.

But underlying inflation expectations remained steady at 1.1 per cent for this year and 1.3 per cent next year, indicating that the rise in inflation is fuelled by volatile food and fuel prices with little effect on core trends.

Growth is meanwhile expected to accelerate more than earlier thought with 2017 growth now seen at 1.7 per cent, above an earlier forecasts for 1.5 per cent.

But growth will then slow steadily in the coming years, first to 1.6 per cent next year, then 1.5 per cent in 2019, the survey indicated.