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, 24 January 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,
which was also attended by the Commission Vice-President, Mr Dombrovskis.
Based on our regular economic and monetary analyses, we decided to keep the key ECB
unchanged. We continue to expect them to remain at their present levels at least
interest rates
through the summer 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.
Regarding non-standard monetary policy measures, 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 incoming information has continued to be weaker than expected on account of softer
external demand and some country and sector-specific factors. The persistence of uncertainties
in particular relating to geopolitical factors and the threat of protectionism is weighing on
economic sentiment. At the same time, supportive financing conditions, favourable labour market
dynamics and rising wage growth continue to underpin the euro area expansion and gradually
rising inflation pressures. This supports our confidence in the continued sustained convergence
of inflation to levels that are below, but close to, 2% over the medium term. Significant monetary
policy stimulus remains essential to support the further build-up of domestic price pressures and
headline inflation developments over the medium term. This will be provided by our forward
guidance on the key ECB interest rates, reinforced by the reinvestments of the sizeable stock of
acquired assets. In any event, 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.
Let me now explain our assessment in greater detail, starting with the economic analysis. Euro
area real GDP increased by 0.2%, quarter on quarter, in the third quarter of 2018, following
growth of 0.4% in the previous two quarters. Incoming data have continued to be weaker than
expected as a result of a slowdown in external demand compounded by some country and
sector-specific factors. While the impact of some of these factors is expected to fade, the
nearterm growth momentum is likely to be weaker than previously anticipated. Looking ahead, the
euro area expansion will continue to be supported by favourable financing conditions, further
employment gains and rising wages, lower energy prices, and the ongoing - albeit somewhat
slower - expansion in global activity.
The risks surrounding the euro area growth outlook have moved to the downside on account of
the persistence of uncertainties related to geopolitical factors and the threat of protectionism,
vulnerabilities in emerging markets and financial market volatility.
Euro area annual HICP inflation declined to 1.6% in December 2018, from 1.9% in November,
reflecting mainly lower energy price inflation. On the basis of current futures prices for oil,
headline inflation is likely to decline further over the coming months. Measures of underlying
inflation remain generally muted, but labour cost pressures are continuing to strengthen and
broaden 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 monetary analysis, broad money (M3) growth moderated to 3.7% in November
2018, after 3.9% in October. M3 growth continues to be backed by bank credit creation. The
narrow monetary aggregate M1 remained the main contributor to broad money growth.
The annual growth rate of loans to non-financial corporations stood at 4.0% in November 2018,
after 3.9% in October, while the annual growth rate of loans to households remained broadly
unchanged at 3.3%. The euro area bank lending survey for the fourth quarter of 2018 suggests
that overall bank lending conditions remained favourable, following an extended period of net
easing, and demand for bank credit continued to rise, thereby underpinning loan growth.
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 - in
particular 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 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 the Governing Council reiterates the
fiscal policies,
need for rebuilding fiscal buffers. This is particularly important in countries where government
debt is high and for which full adherence to the Stability and Growth Pact is critical for
safeguarding sound fiscal positions. Likewise, the transparent and consistent implementation of
the EU'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.