Mario Draghi: ECB press conference - introductory statement
Introductory statement by Mr Mario Draghi, President of the European Central Bank, and Mr Luis
de Guindos, Vice-President of the European Central Bank, Frankfurt am Main, 10 April 2019.
* * *
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 at least
through the end of 2019, and in any case for as long as necessary to ensure the continued
sustained convergence of inflation to levels that are below, but close to, 2% over the medium
term.
We intend to continue reinvesting, in full, the principal payments from maturing securities
purchased under the asset purchase programme for an extended period of time past the date
when we start raising the key ECB interest rates, and in any case for as long as necessary to
maintain favourable liquidity conditions and an ample degree of monetary accommodation.
The Governing Council stands ready to adjust all of its instruments, as appropriate, to ensure
that inflation continues to move towards the Governing Council's inflation aim in a sustained
manner.
Details on the precise terms of the new series of targeted longer-term refinancing operations
(TLTROs) will be communicated at one of our forthcoming meetings. In particular, the pricing of
the new TLTRO-III operations will take into account a thorough assessment of the bank-based
transmission channel of monetary policy, as well as further developments in the economic
outlook. In the context of our regular assessment, we will also consider whether the preservation
of the favourable implications of negative interest rates for the economy requires the mitigation of
their possible side effects, if any, on bank intermediation.
The information that has become available since the last Governing Council meeting in early
March confirms slower growth momentum extending into the current year. While there are signs
that some of the idiosyncratic domestic factors dampening growth are fading, global headwinds
continue to weigh on euro area growth developments. The persistence of uncertainties, related to
geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets, is leaving
marks on economic sentiment. At the same time, further employment gains and rising wages
continue to underpin the resilience of the domestic economy and gradually rising inflation
pressures. However, an ample degree of monetary accommodation remains necessary to
safeguard favourable financing conditions and support the economic expansion, and thus to
ensure that inflation remains on a sustained path towards levels that are below, but close to, 2%
over the medium term. Significant monetary policy stimulus is being provided by our forward
guidance on the key ECB interest rates, reinforced by the reinvestments of the sizeable stock of
acquired assets and the new series of TLTROs.
Let me now explain our assessment in greater detail, starting with the economic analysis. Euro
area real GDP rose by 0.2%, quarter on quarter, in the fourth quarter of 2018, following an
increase of 0.1% in the third quarter. Incoming data continue to be weak, especially for the
manufacturing sector, mainly on account of the slowdown in external demand, which has been
compounded by some country and sector-specific factors. As the impact of these factors is
turning out to be somewhat longer-lasting, the slower growth momentum is expected to extend
into the current year. Looking ahead, the effect of these adverse factors is expected to unwind.
The euro area expansion will continue to be supported by favourable financing conditions, further
employment gains and rising wages, and the ongoing - albeit somewhat slower - expansion in
global activity.
The risks surrounding the euro area growth outlook remain tilted to the downside, on account of
the persistence of uncertainties related to geopolitical factors, the threat of protectionism and
vulnerabilities in emerging markets.
According to Eurostat's flash estimate, euro area annual HICP inflation was 1.4% in March 2019,
after 1.5% in February, reflecting mainly a decline in food, services and non-energy industrial
goods price inflation. On the basis of current futures prices for oil, headline inflation is likely to
decline over the coming months. Measures of underlying inflation remain generally muted, but
labour cost pressures have strengthened and broadened amid high levels of capacity utilisation
and tightening labour markets. Looking ahead, underlying inflation is expected to increase over
the medium term, supported by our monetary policy measures, the ongoing economic expansion
and rising wage growth.
Turning to the broad money (M3) growth increased to 4.3% in February
monetary analysis,
2019, from 3.8% in January. Looking through some volatility in monthly flows, M3 growth
continues to be backed by bank credit creation, notwithstanding a recent moderation in credit
dynamics. The narrow monetary aggregate M1 remained the main contributor to broad money
growth.
The annual growth rate of loans to non-financial corporations rebounded to 3.7% in February
2019, from 3.4% in January, reflecting mainly a base effect. Looking through short-term volatility,
the annual growth rate of loans to non-financial corporations has moderated in recent months,
reflecting the typical lagged reaction to the slowdown in economic growth. At the same time, the
annual growth rate of loans to households remained broadly unchanged at 3.3% in February. The
euro area bank lending survey for the first quarter of 2019 suggests that overall bank lending
conditions remained favourable.
Our monetary policy measures, including the new series of TLTROs that we announced in
March, will help to safeguard favourable bank lending conditions and will continue to support
access to financing, in particular for small and medium-sized enterprises.
To sum up, a cross-check of the outcome of the economic analysis with the signals coming
from the monetary analysis confirmed that an ample degree of monetary accommodation is still
necessary for the continued sustained convergence of inflation to 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 more 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. Regarding fiscal policies, the mildly expansionary euro area
fiscal stance and the operation of automatic stabilisers are providing support to economic
activity. At the same time, countries where government debt is high need to continue rebuilding
fiscal buffers. All countries should reinforce their efforts to achieve a more growth-friendly
composition of public finances. Likewise, the transparent and consistent implementation of the
European Union's fiscal and economic governance framework over time and across countries
remains essential to bolster the resilience of the euro area economy. Improving the functioning of
Economic and Monetary Union remains a priority. The Governing Council welcomes the ongoing
work and urges further specific and decisive steps to complete the banking union and the capital
markets union.
We are now at your disposal for questions.