‘ECB price outlook not as dire as market bets’

Bloomberg

The European Central Bank’s outlook for euro-zone inflation is “not bad” and investors have underestimated the institution’s willingness to act if needed, according to policy maker Vitas Vasiliauskas.
Market-based inflation expectations have dipped to near a record low despite ECB President Mario Draghi saying that interest-rate cuts and asset purchases could be deployed if needed to fight any further economic weakness.
The reaction was “definitely hawkish” and “a bit surp-
rising,” Vasiliauskas told Bloomberg in an interview, a day after the ECB met in Vilnius. “Markets are very important, but we make decisions, not markets. So of course it is good if your forecast is more or less in line with the market expectations, but we know examples that it can be difficult.”
Vasiliauskas, who heads the Lithuanian central bank, noted that the ECB’s updated projections foresee consumer-price growth improving to 1.6 percent in 2021, not far below the goal of just under 2 percent. Policy makers also stuck to their baseline scenario that GDP growth will pick up in the second half of 2019.