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Inflation will struggle to hit ECB's target, Nowotny says

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Inflation will struggle to hit ECB's target, Nowotny says

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By Marc Jones and Karin Strohecker LONDON (Reuters) – Euro zone inflation will struggle to reach the European Central Bank’s target in years to come and unemployment will remain “very high” across the bloc, an ECB policymaker said on Friday. The ECB announced last week that starting next year it would reduce its bond-buying programme to 30 billion euros (£26.6 billion) a month from its current 60 billion euros. However, inflation in the euro zone remains stubbornly below the central bank’s target of just under 2 percent, which is the main reason it has been cautious about reducing the two-year old stimulus programme. “This goal of 2 percent or 1.9 is something that will not be easily reached in the years to come,” said Ewald Nowotny, a long-serving member of the ECB’s Governing Council. Speaking at an event organised by the policy think tank OMFIF, Nowotny added that unemployment levels were “still very high” despite recent declines. He said the ECB’s plans to reduce the monthly pace of bond buying from January was not a “tapering” as there was still an “open-ended” element to the arrangement. “If things go well as we think in the economy, there are good reasons then (from next September) to start to taper,” he said.

(Reporting by Karin Strohecker and Marc Jones, editing by Larry King)
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