ECB shrugs off calls for more stimulus

European Central Bank president Mario Draghi wants a clearer picture of price trends before acting again on the economy.

LONDON (CNNMoney)

The International Monetary Fund and the Organisation for Economic Co-operation and Development are worried that a prolonged period of very low inflation in Europe could suppress demand and job creation, causing a slowdown in the the recovery.

"We call on the European Central Bank to take new policy actions to move inflation more decisively towards target and to be ready for additional non-conventional stimulus if inflation were to show no clear sign of returning there," the OECD said earlier this week.

ECB president Mario Draghi said last month that the bank stood ready to cut rates -- even into negative territory -- or print money through a program of Fed-style asset purchases if necessary.

The main rate has been at a record low of 0.25% since November, the last time rates were cut.

Inflation fell to 0.5% in March, before recovering slightly to 0.7% in April. That is still way below the ECB's medium term target of just below 2%.

Related: Beware the Russia risk, warns Europe

Recent data suggest that the eurozone recovery is gaining traction but there are still several clouds on the horizon.

Unemployment remains stuck just below its record level of 12%, sapping consumer demand. The euro is trading near its recent peak above $1.39, making life harder for European exporters and exerting more downward pressure on prices as imports become cheaper.

To make matters worse, there are early signs that the meltdown in Russia's economy is starting to hurt some of Europe's big companies. Any escalation in the conflict in eastern Ukraine could hit business and household confidence.

Still, most economists were not expecting the ECB to act until it publishes updated forecasts for growth and inflation in June, when it will also have May inflation data to consider.

First Published: May 8, 2014: 8:03 AM ET

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