Mario Draghi: ECB press conference - introductory statement
Introductory statement by Mr Mario Draghi, President of the European Central Bank, and Mr Vítor
Constâncio, Vice-President of the European Central Bank, Frankfurt am Main, 26 April 2018.
* * *
Ladies and gentlemen, the Vice-President and I are very pleased to welcome you to our press
conference. We will now report on the outcome of today's meeting of the Governing Council.
Based on our regular economic and monetary analyses, we decided to keep the key ECB
interest rates unchanged. We continue to expect them to remain at their present levels for an
extended period of time, and well past the horizon of our net asset purchases.
Regarding we confirm that our net asset purchases,
non-standard monetary policy measures,
at the current monthly pace of €30 billion, are intended to run until the end of September 2018, or
beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment
in the path of inflation consistent with its inflation aim. The Eurosystem will continue to reinvest
the principal payments from maturing securities purchased under the asset purchase
programme for an extended period of time after the end of its net asset purchases, and in any
case for as long as necessary. This will contribute both to favourable liquidity conditions and to
an appropriate monetary policy stance.
Following several quarters of higher than expected growth, incoming information since our
meeting in early March points towards some moderation, while remaining consistent with a solid
and broad-based expansion of the euro area economy. The underlying strength of the euro area
economy continues to support our confidence that inflation will converge towards our inflation
aim of below, but close to, 2% over the medium term. At the same time, measures of underlying
inflation remain subdued and have yet to show convincing signs of a sustained upward trend. In
this context, the Governing Council will continue to monitor developments in the exchange rate
and other financial conditions with regard to their possible implications for the inflation outlook.
Overall, an ample degree of monetary stimulus remains necessary for underlying inflation
pressures to continue to build up and support headline inflation developments over the medium
term. This continued monetary support is provided by the net asset purchases, by the sizeable
stock of acquired assets and the ongoing and forthcoming reinvestments, and by our forward
guidance on interest rates.
Let me now explain our assessment in greater detail, starting with the economic analysis. Real
GDP increased by 0.7%, quarter on quarter, in the fourth quarter of 2017, following similar growth
in the previous quarter. This resulted in an average annual growth rate of 2.4% in 2017 - the
highest since 2007. The latest economic indicators suggest some moderation in the pace of
growth since the start of the year. This moderation may in part reflect a pull-back from the high
pace of growth observed at the end of last year, while temporary factors may also be at work.
Overall, however, growth is expected to remain solid and broad-based. Our monetary policy
measures, which have facilitated the deleveraging process, should continue to underpin
domestic demand. Private consumption is supported by ongoing employment gains, which, in
turn, partly reflect past labour market reforms, and by growing household wealth. Business
investment continues to strengthen on the back of very favourable financing conditions, rising
corporate profitability and solid demand. Housing investment continues to improve. In addition,
the broad-based global expansion is providing impetus to euro area exports.
The risks surrounding the euro area growth outlook remain broadly balanced. However, risks
related to global factors, including the threat of increased protectionism, have become more
prominent.
Euro area annual HICP inflation increased to 1.3% in March 2018, from 1.1% in February. This
reflected mainly higher food price inflation. On the basis of current futures prices for oil, annual
rates of headline inflation are likely to hover around 1.5% for the remainder of the year. Measures
of underlying inflation remain subdued overall. Looking ahead, they are expected to rise gradually
over the medium term, supported by our monetary policy measures, the continuing economic
expansion, the corresponding absorption of economic slack and rising wage growth.
Turning to the monetary analysis, broad money (M3) continues to expand at a robust pace, with
an annual growth rate of 4.2% in February 2018, slightly below the narrow range observed since
mid-2015. M3 growth continues to reflect the impact of the ECB's monetary policy measures and
the low opportunity cost of holding the most liquid deposits. Accordingly, the narrow monetary
aggregate M1 remained the main contributor to broad money growth, continuing to expand at a
solid annual rate.
The recovery in the growth of loans to the private sector observed since the beginning of 2014 is
proceeding. The annual growth rate of loans to non-financial corporations stood at 3.1% in
February 2018, after 3.4% in January and 3.1% in December 2017, while the annual growth rate
of loans to households remained unchanged at 2.9%. The euro area bank lending survey for the
first quarter of 2018 indicates that loan growth continues to be supported by increasing demand
across all loan categories and a further easing in overall bank lending conditions for loans to
enterprises and loans for house purchase.
The pass-through of the monetary policy measures put in place since June 2014 continues to
significantly support borrowing conditions for firms and households, access to financing -
notably for small and medium-sized enterprises - and credit flows across the euro area.
To sum up, a of the outcome of the economic analysis with the signals coming
cross-check
from the monetary analysis confirmed the need for an ample degree of monetary
accommodation to secure a sustained return of inflation rates towards levels that are below, but
close to, 2% over the medium term.
In order to reap the full benefits from our monetary policy measures, other policy areas must
contribute decisively to raising the longer-term growth potential and reducing vulnerabilities. The
implementation of structural reforms in euro area countries needs to be substantially stepped
up to increase resilience, reduce structural unemployment and boost euro area productivity and
growth potential. Against the background of overall limited implementation of the 2017
countryspecific recommendations, greater reform effort is necessary in euro area countries. Regarding
fiscal policies, the ongoing broad-based expansion calls for rebuilding fiscal buffers. This is
particularly important in countries where government debt remains high. All countries would
benefit from intensifying efforts towards achieving a more growth-friendly composition of public
finances. A full, transparent and consistent implementation of the Stability and Growth Pact and
of the macroeconomic imbalance procedure over time and across countries remains essential
to increase the resilience of the euro area economy. Improving the functioning of Economic and
Monetary Union remains a priority. The Governing Council urges specific and decisive steps to
complete the banking union and the capital markets union.
We are now at your disposal for questions.