ELA funding to Greek banks drops 1.35 bln euros in August

That marks a downward revision to Eurostat’s flash estimate of 0.2% and pushes annual inflation further away from the ECB’s target of just below 2%.

Although ELA is run through national central banks, the ECB’s full governing council can veto its use with a two-thirds majority.

The waiver would also in theory admit Greece, despite its low credit rating and status as a bailout recipient, to the ECB’s quantitative easing (QE) sovereign bond-buying program, which began in March. Such a move could become necessary if inflation weren’t return to the ECB’s medium-term target, as now envisaged by the bank.

The 40 percent recovery rate so far is low by worldwide comparison and risks remain as outstanding guarantees are worth 2.7 percent of the euro zone’s GDP, the European Central Bank said in an economic bulletin on Wednesday. In August 2014, the annual inflation rate in the EU-28 was 0.5 percent. The problem lies when prices fall consistently over time for a range of goods – as opposed to temporary declines prompted by, say, a fall in prices at the pump, which can give economic activity a boost.

Central banks will still have to seek ECB approval to provide ELA and to make any announcement about it.

In a separate report Wednesday, Eurostat said growth in both labor costs and wages slowed in the second quarter.

Core inflation, a measure that excludes volatile energy and unprocessed food prices, stood at 0.3 percent month-on-month and 0.9 percent year-on-year in August, the same as previously estimated and unchanged from July.