ECB says pension reform reversal could be costly

(supersedes previous)(ANSA) - Rome, June 18 - The European Central Bank said in its monthly bulletin Thursday that backtracking on pension reform in some eurozone countries could affect productivity and employment.
    This could be the case in Italy, Portugal and Spain, where expectations on productivity and employment could turn out optimistic as a result of "risks connected to reversal of adopted reforms", the ECB said. The ECB also said eurozone economic recovery "should expand further", with analysts forecasting eurozone GDP growth at 1.55% this year, 1.9% in 2016, and 2% in 2017. However uncertainties over Greece and other geopolitical situations "continue holding recovery back" and have driven spreads between sovereign paper and their ultra-safe German counterparts up by 40 basis points in Italy and Spain, and by 60 points in Portugal. In Italy, the spread between the benchmark 10-year bond and it German equivalent opened Thursday at 155.1 points, up from 150.3 basis points at yesterday's close.
    The yield on Italy's 10-year paper opened trading at 2.315%.
    Eurozone inflation is expected to reach 0.3% in 2015, 1.5% in 2016 and 1.8% two years from now, according to the ECB.
    As well, the ECB said its quantitative easing (QE) program of massive bond-buying is showing "positive results" and will continue at a pace of 60 billion euros a month through September 2016 or as long as needed.