Constancio Says He Doesn't See Deflation Risk In The Eurozone

The euro was steady near $1.38 as the European Central Bank meeting approached and speculation about the bank's plans grew more uncertain. The common currency traded at $1.379 at 5:30 GMT on Wednesday after the bloc's finance ministers declared that they did not see an immediate risk of deflation despite the region's unexpectedly low March inflation figures.

reported that ECB vice President Vitor Constancio gave a news conference in Athens on Tuesday in which he said he saw no prospect of deflation. Although he did admit that the region's low inflation figures could drag down the bloc's recovery, he did not express any worries about eurozone inflation slipping below zero. Constancio remarked that the ECB would have a closer look at the region's recovery as a whole at Thursday's meeting. Many are expecting the bank to ease further either through an asset purchase program or a negative deposit rate in order to fight inflation. However, Constancio had an optimistic view of the bloc's future. He said that he was expecting to see better inflation figures in April and that the bloc's recovery was expected to gain momentum in the coming months. The recently strong euro coupled with low inflation has made it difficult for struggling eurozone nations to remain competitive and lower their debt. For this reason, eurozone central bankers have been considering a policy change in order to help support the region's fragile economy and fight falling inflation. The International Monetary Fund has also been vocal about the need for the ECB to cut rates or implement a quantitative easing program.