World Economy

ECB Keen to Keep Inflation Target on Track

ECB Keen to Keep Inflation Target on TrackECB Keen to Keep Inflation Target on Track

The European Central Bank is ready to do what it takes to keep its medium-term inflation target on course, its head Mario Draghi said in a newspaper interview published on Saturday.

Consumer prices in the 19-country eurozone slipped by 0.1% in September, far from the bank's aim of just below 2%, prompting calls for the ECB to expand or extend its €60 billion a month of asset purchases, Reuters reported.

"If we are convinced that our medium-term inflation target is at risk, we will take the necessary actions," Draghi told the Italian daily Il Sole 24 Ore.

"We will see whether a further stimulus is necessary. This is an open question," he said, adding it would take longer than was foreseen in March to return to price stability.

Draghi said inflation in the eurozone was expected to remain close to zero, if not negative, at least until the beginning of next year.

"From mid-2016 to the end of 2017, also due to the delayed effect of the depreciation in the exchange rate, we expect inflation to increase gradually," he said.

Asked about what other monetary tools the ECB could use, Draghi said the bank already had an extensive set of monetary policy instruments at its disposal.

"However, it is too early to say in any case that 'this is the menu' and that 'there is nothing to add'", he said.

ECB launched in March a government bond buying program to flood the eurozone economy with cash and accelerate price growth that was stifled by a weak economy and very cheap energy prices.

It is studying new stimulus measures that could be unveiled as soon as December and was prepared to cut its deposit rate deeper into negative territory if needed to fight falling prices, Draghi said earlier this month.

The ECB president said risks were on the downside for both inflation and growth in light of weaker emerging economies and the potential slowdown in the US. However, he was upbeat on the future of the eurozone and the risk of a break up.

"The risks of fragmentation and redenomination have diminished considerably, if not disappeared," he said.