By Brian Blackstone in Frankfurt And Jon Hilsenrath in Jackson Hole, Wyo. 

The European Central Bank's stimulus policies should help bring eurozone inflation back toward the bank's target near 2% provided the measures boost demand and bring economic output in Europe back toward its appropriate level, ECB Vice President Vítor Constâncio said Saturday.

"The link between inflation and real activity appears to have strengthened in the euro area recently. Provided our policies are able to significantly reduce the output gap, we can rely on a material effect to help bring the inflation rate closer to target," Mr. Constâncio said in prepared remarks to the Federal Reserve Bank of Kansas City's Jackson Hole conference.

Annual inflation in the eurozone was 0.2% in July, far below the ECB's target. This trend is similar in other major economies, such as the U.S., whose central banks also deem roughly 2% inflation as the optimal level. Faced with ultralow inflation, the ECB in March launched a EUR60 billion-a-month bond-buying program, which is intended to run at least through September 2016.

Later, during the panel discussion, he strongly defended the effectiveness of the bond-buying program, called quantitative easing, saying it had helped reverse a drift toward deflation in the region and buffer Europe against recent shocks.

"In December and beginning of this year we had negative headline deflation and that was then corrected," he said in response to a question. "More importantly we totally stopped the decline in inflation expectations."

Mr. Constâncio's remarks appeared to play down the perceived uncertainty surround the surprising resilience of inflation in the aftermath of the global financial crisis and the sharp drop in price pressures since 2012, especially in Europe, that raised questions about the link between unemployment and inflation.

"There is an important common factor in inflation in the advanced economies that helps explain national inflation dynamics," Mr. Constâncio said. "The current phase of low inflation, aside from commodity price developments, is significantly influenced by negative demand shocks both at the global and national level."

He also said the QE program, moreover had helped to buffer the eurozone against shocks including fiscal turmoil in Greece, political uncertainty in Ukraine, and the deflationary effects of a drop in oil prices.

"Think about what would have happened if we had not adopted such policies with all of the shocks that we had," he said.

Mr. Constâncio pushed back against the idea that the central bank was trying to achieve its objective by pushing down the value of the euro. The ECB is trying to push inflation up toward its 2% objective. He noted that a weaker euro has resulted in little pass-through to more inflation.

The main channels that made bond purchases work was through their effects on stock prices and bond yields, he said.

Write to Brian Blackstone at brian.blackstone@wsj.com and Jon Hilsenrath at jon.hilsenrath@wsj.com

(END) Dow Jones Newswires

August 29, 2015 18:54 ET (22:54 GMT)