European Central Bank chief Mario Draghi on Thursday downplayed risks to the eurozone despite "weaker momentum", and expressed confidence that a budget row between Italy and Brussels could be resolved.
"Risks surrounding the euro area growth outlook can still be assessed as broadly balanced," Draghi told reporters in Frankfurt.
"At the same time, risks relating to protectionism, vulnerabilities in emerging markets and financial market volatility remain prominent."
Fears of an economic slowdown have risen as markets fret over the possibility of a no-deal Brexit, a budget row between Italy and the European Union, and trade tensions sparked by US President Donald Trump's protectionist tendencies.
A closely watched survey on Wednesday showed that business growth in the 19-nation eurozone fell in October to its lowest point in two years, hit by falling exports.
Draghi acknowledged that recent hard and soft data came in "weaker than expected", but said that was not enough to undermine confidence in eurozone growth and rising inflationary pressures.
The ECB last month said it expects eurozone inflation to hit 1.7% in 2018, 2019 and 2020 -- nearing the bank's price growth target of close to but below 2.0%.
"We are talking about a weaker momentum, not a downturn," Draghi said.
Quizzed on how worried the ECB was about Italy's standoff with Brussels over Rome's purse-bursting budget, Draghi said he did not "have a crystal ball" but was "confident" an agreement would be found.
He stressed however that the governing council had spent little time debating Italy, given that it was "a fiscal discussion" and not an issue for central bankers to get involved in.
But he added that European Commission Vice President Valdis Dombrovskis had attended the ECB meeting and quoted him as saying that the EU was "seeking a dialogue" with Rome.
In an unprecedented move, Brussels has given Rome three weeks to revise the budget which it says breaks the bloc's financial rules.
The spat has revived fears over Italy's huge debt mountain, which at some 130% of gross domestic product (GDP) is second only to Greece's in Europe.
The populist Italian government's insistence on ramping up spending has sent yields on Italian bonds rising, making the country's borrowing costs more expensive.
But so far, Draghi said he saw little evidence of other countries being affected by Italy's woes.
"There may be some spillovers but they're limited. That's the current situation and I will keep you posted as the situation will evolve," he said.
