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Purchasing manager survey shows business activity at highest level in 3 years

FRANKFURT - A closely-watched survey has found business activity across the 18-country eurozone running at a three-year high, in perhaps the clearest sign yet that the economic recovery is gaining momentum. Analysts say Wednesday's positive data could take some of the pressure off the European Central Bank to take further steps to stimulate the economy at its next monthly policy meeting on May 8 despite stubbornly low inflation across the 18-country single currency zone.

Injecting cash to stimulate economy would be complex for ECB, Hansson says

By David Mardiste TALLINN (Reuters) - Quantitative easing would be operationally complex for the European Central Bank, policymaker Ardo Hansson said, casting doubt on whether the bank could implement such a plan to ward off the threat of deflation. The ECB governing council said earlier this month it was unanimous in its commitment to use unconventional tools - central bank-speak for things like quantitative easing (QE), or printing money to buy assets - to counter a protracted period of low inflation.

ECB hardliner Weidmann comes in from the cold as deflation threatens

By Paul Carrel FRANKFURT (Reuters) - As recently as last November, Jens Weidmann steadfastly opposed any move by the European Central Bank to print money to buy assets and buoy the euro zone economy. No longer. The Bundesbank chief, known for his hardline stances at the ECB and as head of the German central bank, is now ready to support such quantitative easing (QE) if he and his ECB colleagues deem it necessary.

Low inflation to linger for years in euro zone

By Sumanta Dey (Reuters) - The euro zone is set for at least two more years of low inflation, held down by a strong currency and anemic economic and jobs growth, and still faces a very real threat of deflation, a Reuters poll showed on Wednesday. While the inflation forecasts are mostly in line with the European Central Bank's predictions, they show the difficulty the bank will have in reversing the trend of falling inflation given that its key interest rates are already at or near zero.

Euro strength here to stay, unless ECB steps in

By Anirban Nag and Eva Taylor LONDON/FRANKFURT (Reuters) - Many of the factors driving the euro exchange rate to levels that have set off alarm bells at the European Central Bank are unlikely to go away on their own, part of the reason the bank has been threatening action. The euro is still off the peaks of 2011, but because inflation is now heading close to zero, the ECB is sensitive to its current rate because anything that makes it stronger pushes deflation nearer.

Euro zone inflation sticks in 'danger zone', keeps ECB under pressure

BRUSSELS (Reuters) - A drop in March euro zone inflation to its lowest level since November 2009 was confirmed on Wednesday, keeping pressure on the European Central Bank to intervene if prices do not rebound. The year-on-year inflation rate in the 18 countries sharing the euro was 0.5 percent in March, down from 0.7 percent in February, the European Union's statistics office Eurostat said. It was the sixth straight month that inflation remained in what ECB President Mario Draghi called a "danger zone" of below 1 percent.

ECB ready to use asset purchases if needed: Coeure

WASHINGTON (Reuters) - The European Central Bank is ready to make asset purchases if it deems them necessary to counter a too prolonged period of low inflation in the euro zone, ECB Executive Board member Benoit Coeure said on Sunday. In a speech in Washington, Coeure added that the ECB would have to decide whether such asset purchases, or a form of quantitative easing, would be useful and comply with its mandate. Quantitative easing occurs when central banks print money to buy assets.

ECB's Draghi: the strong euro could require policy action

European Central Bank chief Mario Draghi said Saturday that the bank may need to take action to stem the rising euro. "The strengthening of the exchange rate would require monetary stimulus" as long as interest rates are already extremely low, he said. Draghi also said that the ECB "should not be complacent" about extremely low inflation, which many fear could stall Europe's economic rebound.

ECB would need to go beyond ABS market for potential QE: Draghi

By Jan Strupczewski and Krista Hughes WASHINGTON (Reuters) - The European Central Bank could not rely solely on purchases of asset-backed securities (ABS) if it resorts to unconventional steps to boost inflation, given the limited supply of the securities, ECB President Mario Draghi said on Saturday. If the ECB starts injecting money into the economy using asset purchases, it is expected to choose a mix of government and private assets, including ABS, which collapsed during the financial crisis and are still recovering.

ECB's Weidmann: no sign deflation spiral will grip euro zone

WASHINGTON (Reuters) - European Central Bank policymaker Jens Weidmann said on Friday he saw no risk of a growth-destroying deflationary spiral taking hold in the euro zone, adding that the bloc's economy would pick up and therefore cause the inflation rate to gradually rise. Euro zone inflation is running at 0.5 percent - well below the central bank's target of close to but just below 2 percent. The ECB's latest staff forecast said inflation in the bloc would rise to 1.7 percent in the last quarter of 2016.
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