The euro zone is likely to escape the threat of outright deflation this year, the head of Italy's central bank told CNBC on Saturday, but he warned of "very, very low inflation" ahead.
Ignazio Visco, the Bank of Italy governor, made the comments in an exclusive interview just days after the European Central Bank (ECB) downgraded its inflation forecasts for the year. Currently, the ECB sees inflation at 1.1 percent next year, below its June forecast of 1.5 percent. The central bank also expects economic growth in 2016 of 1.7 percent, versus its June forecast of 1.9 percent.
Visco—also a member of the ECB's governing council—also echoed the comments made by ECB head Mario Draghi on Thursday. Draghi said that the central bank could expand its asset purchase program— or quantitative easing (QE) beyond the original deadline of September 2016, if circumstances required. Regardless, the Bank of Italy head said that QE is definitely working.
On the sidelines of the G20 summit in Ankara, Turkey, Visco told CNBC that, "...if by end of September next year we still think it is needed to keep it going because the objective is not really reached, we will go and keep it going."
He added: "For the time being we are very very determined to continue to purchase at the pace that we have been doing, and we have not seen difficulties in that," Visco said.