Following record low interest rates of 0.05%, the European Central Bank has raised its inflation forecast to 0.3% after putting it at 0%. ECB president Mario Draghi, while addressing a news conference in Frankfurt, Germany stated that the Eurozone is on the track of recovery.
Draghi said that the threats to the duration of recovery have now diminished and although the positive turn-around will not be as strong as strong as expected, slow but sure growth is to be expected.
The euro inflation core rate soared to 0.9% in May of this year, putting an end to the threat that induced the ECB to go into money printing. The inflation next year is projected to be 1.5% and growth was set at 1.5% for this year, to rise to 1.9% in 2016.
According to Draghi, achieving this successfully depends on the ability to effectively implement the quantitative easing scheme, which will last until September 2016.
Last year's steep fall in oil prices had facilitated the euro's condition, however now that oil prices are once again on the rise, this will surely place more pressure on growth. The ECB will be monitoring volatility on the market in order to mitigate as much as possible the risk of deflation.
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