Some ECB governors worried March forecasts were too benign

FILE PHOTO: The logo of the European Central Bank (ECB) is pictured outside its headquarters in Frankfurt, Germany, April 26, 2018. REUTERS/Kai Pfaffenbach

FRANKFURT (Reuters) – Some European Central Bank policymakers worried at their last meeting that the ECB’s new economic forecasts about wages, growth and inflation were too benign, even before they were published, the ECB said on Thursday.

The ECB said at that meeting that it expected inflation would gradually decline to its 2% target by 2025, wage rises would moderate while economic growth would pick up.

But some of its 26 policymakers expressed doubts about what they called an “immaculate disinflation”, the ECB’s account of the March 15-16 meeting showed.

“Some members argued that there was only a small probability that inflation would fall back to low levels as quickly as suggested in the March ECB staff projections, which gave the impression of an ‘immaculate disinflation’ (i.e. a return of inflation to target with very low cost in terms of lost output),” the ECB said in the account.

It added “a number of members” of the Governing Council saw risks to the inflation outlook “as tilted to the upside over the entire horizon”.

The ECB raised interest rates by 50 basis points at that meeting but it said the outlook was too uncertain to commit to more as a crisis was engulfing one of the world’s largest banks, Credit Suisse.


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