European Central Bank chief dismisses deflation fears, stresses readiness to act if needed

BRUSSELS – The head of the European Central Bank is dismissing fears that the 18-nation eurozone could fall into deflation, when consumer prices fall, threatening growth.

President Mario Draghi said Thursday that recent data on low inflation remain consistent with the ECB’s assessment of a “prolonged period of low inflation followed by a gradual upward movement.”

Draghi stresses, however, that the ECB’s decision-making body is “unanimous” in its determination to maintain a highly accommodative monetary policy stance and stands ready to use “also unconventional measures” if inflation were to remain significantly below its projected track.

Such measures could include a new round of cheap loans to banks or large-scale purchases of financial assets, as the U.S. Federal Reserve has done.

The ECB left its benchmark refinancing rate unchanged at record-low 0.25 per cent.