The European Central Bank said on Thursday that there is no build-up in underlying inflationary pressures in the euro zone and that economic growth had yet to pick up.
The editorial in the ECB's monthly bulletin also warned that "continued vigilance" was required regarding inflation in the medium term. "Upside risks to price stability over the medium term remain. Continued vigilance is therefore of the essence with regard to those risks," the editorial read.
It repeated a statement given on February 3rd by ECB President Jean-Claude Trichet when the central bank left its official interest rates steady at 2 per cent.
The ECB's latest Survey of Professional Forecasters, released in the bulletin, gave some insight into recent ECB policymakers' concerns over the inflationary expectations.
The first-quarter survey found that inflation expectations came down, but analysts said expectations remained high and outside the ECB's comfort zone.
The survey found inflation expectations for 2006 were revised down to 1.8 per cent, from 1.9 per cent in its fourth quarter survey, but expectations for 2005 were unchanged at 1.9 per cent.