ECB survey sees higher inflation 2011, 2012

FRANKFURT: Professional forecasters surveyed by the European Central Bank have raised their eurozone inflation forecasts slightly, the ECB said Thursday, a development that might complicate interest rate decisions.

The Survey of Professional Forecasters found they now expect 2.6 percent inflation this year, falling to 2.0 percent in 2012, the EVC said in its monthly bulletin for August.

ECB policymakers have an inflation target of below but close to 2.0 percent but will almost certainly miss it this year as higher energy costs have pushed up prices through the economy.

For 2013, the survey found that inflation was expected to fall back around the ECB target, at 1.9 percent.

Owing to a sharp slowdown in activity that stems in part from the eurozone's debt crisis, economists believe the ECB will mark a pause after hiking interest rates from 1.00 percent to 1.50 percent earlier this year.

Keeping inflation under control is the central bank's primary mandate but the ECB could face conflicting demands on monetary policy should inflation remain stuck above 2.0 percent as economic growth slows.

Copyright AFP (Agence France-Presse), 2011