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ECB survey downgrades inflation, growth forecasts

Experts surveyed by the European Central Bank (ECB) have downgraded their forecasts for both inflation and growth in the euro zone as a result of weakness in the oil price and sluggish economic growth in the euro zone.

The results, published on Thursday, revealed that the 61 economists and academics expect inflation to come in at 1 percent in 2015 - down from earlier projections of 1.2 percent - and 1.4 percent in 2016, down from 1.5 percent.

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Mario Draghi, President of the European Central Bank (ECB).
Daniel Roland | AFP | Getty Images
Mario Draghi, President of the European Central Bank (ECB).

The ECB's quarterly Survey of Professional Forecasters blamed the current low level of inflation on the dramatic fall in the oil price, weak import prices and the lagged impact of the past appreciation of the euro.

Some 85 percent of respondents revised down their forecasts for 2014 and 2015, and 60 percent lowered expectations for for 2016.

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The group said the weaker euro had counteracted deeper revisions in their forecasts.

Unemployment expectations remained stable for the short term but were revised upwards slightly for longer-term horizons. The latest figures show the euro zone's unemployment rate held steady in September at 11.5 percent.

The panel warned risks to the short and medium-term "remain tilted to the upside" as a sustained period of low growth and low inflation could prevent firms from investing and hiring more staff.