ECB’s Draghi raises prospect of slower inflation pick-up amid ‘uncertainties’

FRANKFURT (Reuters) – European Central Bank President Mario Draghi on Friday reaffirmed plans to dial back stimulus at the end of the year but also voiced caution about the growth outlook, warning that the pick up in inflation may be slower than earlier expected.

“If firms start to become more uncertain about the growth and inflation outlook, the squeeze on margins could prove more persistent,” Draghi told a banking conference.

“This would affect the speed with which underlying inflation picks up and therefore the inflation path that we expect to see in the quarters ahead,” he added. “Uncertainties surrounding the medium-term outlook have increased.”

The ECB has long said it plans to end its 2.6 trillion euro bond purchase scheme by the close of the year and aims to keep rates at record lows at least “through” next summer.

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