Deflation risks easing

European Central Bank president Mario Draghi signalled that deflation risks in the euro region are easing for now after new forecasts showed inflation will approach its target by the end of 2016.

“The news that has come out since the last monetary policy meeting are, by and large, on the positive side,” he said in Frankfurt yesterday after the central bank kept its main interest rate at 0.25%. He also indicated that money markets are under control at the moment, lessening the need for emergency liquidity measures.

Draghi is facing down the threat of deflation in an economy still recovering from a debt crisis that threatened to rip it apart less than two years ago. New ECB forecasts underscore his view that the 18-nation bloc will escape a Japan-style period of falling prices, as momentum in the economy improves.