In ECB's 2020 vision, inflation goal elusive

FRANKFURT AM MAIN: The European Central Bank on Thursday lifted its growth forecasts for the coming years on the back of a booming eurozone economy, but said it did not expect to hit its inflation goal by 2020.

ECB chief Mario Draghi said the latest staff projections showed consumer prices rising by 1.7 percent in 2020, still below the bank's target of just under 2.0 percent that is seen as most favourable for growth.

"Domestic price pressures remain muted overall and have yet to show convincing signs of a sustained upward trend," Draghi told reporters after the governing council's last meeting of the year.

For 2018, the bank slightly lifted its inflation forecast from 1.2 percent to 1.4 percent.

Consumer prices are expected to rise by 1.5 percent in both 2017 and 2019, according to staff projections, unchanged from the September forecasts.

Draghi said he was confident inflation was moving in the right direction, but reiterated that the eurozone remained reliant on the bank's stimulus measures.

"An ample degree of monetary stimulus therefore remains necessary for underlying inflation pressures to continue to build up and support headline inflation developments over the medium term," he said.

Earlier on Thursday, policymakers kept the bank's easy money taps open, making no changes to its massive bond buying scheme designed to underpin the eurozone economy and leaving interest rates at historic lows.

Draghi has indicated that he believes the bank's extraordinary measures have played a crucial role in the eurozone recovery.

But more hawkish voices are increasingly calling for markets to be weaned off cheap money as the economy powers ahead, despite sluggish inflation.

Updated growth estimates unveiled by the ECB on Thursday showed an upbeat outlook for the next three years.

"We are certainly more confident today than we were two months ago," Draghi said.

The Frankfurt institution now expects growth of 2.4 percent in 2017, 2.3 percent in 2018 and 1.9 percent in 2019.

In its previous projections, the bank had predicted growth of 2.2, 1.8 and 1.7 percent respectively.

For 2020, the ECB is pencilling in growth of 1.7 percent.