ECB policy makers question upbeat growth forecasts

Policy-makers at the European Central Bank flagged up their concerns that eurozone growth could prove weaker than the upbeat forecasts issued by its staff earlier this month, according the minutes of its latest rate-setting meeting.

While members of the governing council "generally shared" ECB economists' positive expectations for the region's economy, the account said some policy makers "remarked that the growth outlook for 2017 depended on a number of factors that might become less growth-supportive towards the end of the projection horizon."

The ECB's staff expects growth of 1.5 per cent this year, 1.9 per cent in 2016, and 2.1 per cent in 2017 as the effects of the central bank's landmark quantitative easing programme seep through the eurozone's economy. The projections, published following the council's meeting in Nicosia on March 5, showed prices were expected to remain flat this year, before rising by 1.5 per cent the following year, and 1.8 per cent in 2017 -- close to the central bank's target of just below 2 per cent.

The projections are more optimistic than those of most forecasters.

According to the minutes, some policy makers thought growth could be weaker than projected if oil prices picked up more quickly than expected, or world trade failed to strengthen considerably, according to the accounts.

The region's recovery could be "constrained" by bottlenecks on eurozone governments introducing much-needed, but politically unpopular, economic reforms.

It was also "not clear to what extent monetary policy would still be as supportive [to growth] in 2017", after the ECB's bond buying is expected to end.

The March forecasts are the first to assess the impact of the €1.1trn QE package on the eurozone's economy. The ECB is set to buy €60bn-worth of public and private-sector bonds between now and September 2016.

The accounts showed there was no-one on the council calling for a smaller QE package, despite better-than-expected news on the economy.

"[The March projections] confirmed that full implementation of [QE] was required to deliver the governing council's mandate," the accounts said.

Signs the eurozone's economic recovery is strengthening have fuelled talk that the ECB could begin to reduce its bond buying before September 2016.

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