ECB says will not focus on transient, oil-fuelled inflation bounce

FRANKFURT (Reuters) - The European Central Bank will look through the recent spike in inflation, which it mostly attributes to a bounce in oil prices, and keep its ultra-easy policy as growth in the price of other goods and services remains slow, it said on Thursday.

Inflation in the euro zone rose to within a whisker of the ECB's target in January, data showed this week, but the bank is pushing back calls from Germany to begin winding down its policy of aggressive bond-buying and below-zero interest rates.

"As expected, headline inflation has increased recently, largely owing to base effects in energy prices, but underlying

inflation pressures remain subdued," the ECB said in its economic bulletin.

"The Governing Council will continue to look

through changes in (headline) inflation if judged to be transient and to have no implication for the medium-term outlook for price stability."

Repeating its Jan 18 policy message, the ECB said very substantial monetary accommodation was needed to bring back inflation to its target of almost 2 percent and keep it there.

In the bulletin, the ECB estimated that the rebound in oil prices over the last year will add more than 40 basis points to the price index by February but the cumulative impact will then gradually wane.

(Reporting by Francesco Canepa; Editing by Balazs Koranyi/Jeremy Gaunt)