Eurozone's economic slump and subdued inflation pressure will allow the European Central Bank (ECB) to continue its accommodative monetary policy in the next two years, but additional measures will be needed to end the ongoing debt crisis, Bank of Finland Governor Erkki Liikanen said Thursday.

Though the favorable monetary policy will support economic recovery and give time for a controlled reduction in debt, structural reforms and measures to address the imbalances in the economy are necessary to resolve the economic crisis effectively, said the ECB Governing Council member at a press meet.

"Over the policy-relevant horizon, inflationary pressures should remain contained and inflation expectations remain firmly anchored in line with the ECB's objectives," Liikanen said. "This will allow the monetary policy stance to remain accommodative."

The policy maker cautioned that balance sheet adjustment, high unemployment and tight financing conditions will continue to hamper economic growth in the crisis countries.

Liikanen said that the ECB's accommodative monetary policy and various non-standard policy measures have helped avoid a credit crunch and removed fears of the reversibility of the euro in the wake of the uncertainty generated by the debt crisis and the expected slowdown in inflation.

The Bank of Finland expects the world economy to grow at a slower pace of 3 percent this year. In Europe, growth is unlikely reach its pre-ciris levels until 2015, and the region is expected to recover only gradually as the fall in housing prices in the crisis countries ends, the health of the banking sector is restored and the level of private debt is reduced.

RTTNews