At the latest ECB meeting, the board lowered its gross domestic product (GDP) forecast for 2005 to about 1.6 percent, down from the previously expected 1.9 percent. However, despite the weak growth outlook, the ECB’s mandate is strictly focused on inflation, not growth.
“Their mandate is not to boost the economy, but to control inflation,” explains Callow. “The bottom line — their mandate is to keep inflation at 2.0 percent or under.”
The latest consumer inflation data out of the Euro zone, the HICP, revealed a 2.1 percent reading as of February.
However, “inflation is seen falling back below 2 percent this year,” notes Stephen Webster, chief European economist at 4cast Inc.
Subscribe to:
Post Comments (Atom)
Post a Comment