WASHINGTON -- The annual inflation rate in the euro zone will likely fall below the European Central Bank's 2.0 percent target soon, Bundesbank President Ernst Welteke said here Friday.

The rate will "probably fall below two percent soon," he told reporters shortly before a dinner of Group of Seven finance ministers and central bankers.

Lower oil prices would bring down the inflation rate, he said.

The German Central Bank boss, also a member of the European Central Bank Board, gave no hint of how the lower inflation rate would impact interest rates.

Prices in the euro zone rose 2.4 percent on a 12-month basis in March.

"The ECB remains focussed on medium term price stability, monetary policy is not an obstacle to growth at the moment," Welteke said.

He also stressed the need to stick fast to the stability pact of the euro zone. "We must continue not to breach to stability pact, even for a short period," he said.

Under the terms of the pact, countries sharing the euro are not allowed to run up public deficits in excess of 3.0 percent of gross domestic product (GDP), under pain of heavy financial penalties.

International Monetary Fund Managing Director Horst Koehler said Thursday Europe should let the economy run full throttle, even if it leads to deficits that break the three percent threshold. (AFP)