FRANKFURT: The European Central Bank on Thursday cut its forecasts for both economic growth and inflation in the single currency area over the next few years.
The ECB, in its regular staff projections, was pencilling in growth of 1.4 percent for 2015, 1.7 percent for 2016 and 1.8 percent for 2017, president Mario Draghi said.
That represented a reduction from the previous set of projections in June, when the bank had been forecasting growth of 1.5 percent, 1.9 percent and 2.0 percent, respectively.
"The economic recovery is expected to continue, albeit at a somewhat weaker pace than expected earlier," the ECB said.
"More recently, renewed downside risks have emerged to the outlook for growth and inflation" from low oil prices and the economic slowdown in China, it said.
Given the subsequent market reaction of "sharp fluctuations in financial and commodity markets," it was too early to say whether these developments could have a lasting impact on the outlook for prices, or whether they should be considered to be mainly transitory, the ECB said.
The central bank also lowered its inflation forecasts, "largely due to lower oil prices," it said.
Area-wide inflation was projected to come in at 0.1 percent this year, 1.1 percent next year and 1.7 percent the year after.
In June, the ECB had been forecasting inflation rates of 0.3 percent, 1.5 percent and 1.8 percent, respectively.
Draghi said that the single currency area could even see negative inflation rates in the coming months, but that was likely to prove only temporary.
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