ECB set to lower euro area inflation forecasts, report says
The single currency weakened after Bloomberg reported that the European Central Bank might be set to lower its short and medium-term forecasts for inflation in the Eurozone.
Euro area officials familiar with the matter told the newswire that the ECB had marked down its projections for euro area consumer price inflation in 2017, 2018, and 2019 from 1.7%, 1.6% and 1.7%, respectively, to 1.5%.
Although the estimates were not yet definitive, they appeared to undermine some traders' confidence that the monetary authority might adopt more balanced guidance the next day.
Following the last Governing Council meeting, ECB chief Mario Draghi reiterated that the ECB's key interest rates might yet be lowered further and that there remained downside risks to economic growth, although the latter had diminished.
Strategists at Bank of America-Merrill Lynch had been expecting the GC to drop the reference to policy rates possibly moving lower still.
As of 1247 BST euro/dollar was down by 0.51% to 1.1225.