The European Central Bank said that inflation in Eurozone is subject to upside risks and it is ready with all the tools necessary to address them "in a firm and timely manner." Inflation in the 17-nation economy is expected to stay above 2 percent in 2012, with upside risks prevailing, the ECB said in its monthly bulletin, echoing the comments made by President Mario Draghi at last week's post-policy meeting press conference. The central bank reiterated that all the non-standard monetary policy measures are temporary in nature and that all the necessary tools are available to address upside risks to medium-term price stability in a firm and timely manner. After the policy meeting last week, Draghi said any talk of an exit strategy regarding monetary policy in the euro area is "premature" despite upside risks to inflation. Policymakers led by the German Bundesbank have raised concerns recently over ECB liquidity injections stoking inflation. The ECB report noted that annual inflation rates should fall below 2 percent again in early 2013. The bank said it will pay particular attention to any signs of pass-through from higher energy prices to wages, profits and general price-setting. However, a combination of modest growth and well-anchored long-term inflation expectations is expected to contribute to only limited underlying price pressures. Over the policy-relevant horizon, the ECB forecasts price developments to remain in line with price stability. A gradual economic recovery is expected in the course of the year. However, the outlook remains "subject to downside risks," the bank said.