Investing.com - The risk that the European Central Bank will miss its medium-term inflation target has increased, the bank’s chief economist said Wednesday, and it is prepared to expand its economic stimulus program if necessary.
ECB Executive Board member Peter Praet said lower commodity prices and signs of economic weakness mean there is an increased risk that the euro area will miss its inflation targets.
“Developments in the world economy and commodity markets have increased the downside risk to achieving the sustainable inflation path towards 2%; the risk has increased," he said.
Inflation in the euro area rose just 0.2% in July, far short of the ECB’s target of close to but just below 2%.
He also indicated that the ECB is prepared to scale up its asset purchase program, known as quantitative easing, if necessary.
“The governing council will closely monitor all incoming information,” he said. “There should be no ambiguity on the willingness and ability of the governing council to act if needed.”
The ECB is currently purchasing €60 billion a month of bonds and asset-backed securities under its monetary stimulus program, which is intended to run until September 2016.
The comments came one day after ECB Vice President Vitor Constancio said the ECB “stands ready to use all the instruments available” if needed to ensure price stability.