By David Barwick – FRANKFURT (Econostream) – Bank of Slovenia Acting Governor Primož Dolenc on Friday said the euro area economy continued to expand while inflation stayed close to the ECB’s 2% target.

Dolenc, who was appointed governor of the Bank of Slovenia earlier in the week and is expected to be confirmed in this role in the near future, said in a statement issued by the central bank that future decisions would continue to be guided by the inflation outlook and risks, underlying inflation dynamics, and the strength of monetary policy transmission, with the stance to be set meeting by meeting.

Eurostat’s flash estimate put euro area inflation at 1.7% in January, down 0.3 percentage point from December, which Dolenc attributed mainly to a sharp decline in energy inflation and slightly lower services inflation.

Economic activity was “somewhat better than expected” in the fourth quarter, he said, with real GDP up 0.3% quarter on quarter, supported mainly by services, while manufacturing remained pressured by changes in tariff policy, uncertainty, and weaker competitiveness.

Financial conditions remained favorable despite heightened geopolitical uncertainty, he said, with euro area sovereign yields little changed since the December meeting and bond-market volatility low, while sovereign and corporate credit spreads stayed at historically low levels.