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, 27 April 2017.
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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 present or lower levels for
interest rates
an extended period of time, and well past the horizon of our net asset purchases.
Regarding non-standard monetary policy measures, we confirm that our net asset purchases,
at the new monthly pace of €60 billion, are intended to run until the end of December 2017, 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 net purchases will be made alongside
reinvestments of the principal payments from maturing securities purchased under the asset
purchase programme.
Our monetary policy measures have continued to preserve the very favourable financing
conditions that are necessary to secure a sustained convergence of inflation rates towards levels
below, but close to, 2% over the medium term. Incoming data since our meeting in early March
confirm that the cyclical recovery of the euro area economy is becoming increasingly solid and
that downside risks have further diminished. At the same time, underlying inflation pressures
continue to remain subdued and have yet to show a convincing upward trend. Moreover, the
ongoing volatility in headline inflation underlines the need to look through transient developments
in HICP inflation, which have no implication for the medium-term outlook for price stability.
A very substantial degree of monetary accommodation is still needed for underlying inflation
pressures to build up and support headline inflation in the medium term. If the outlook becomes
less favourable, or if financial conditions become inconsistent with further progress towards a
sustained adjustment in the path of inflation, we stand ready to increase our asset purchase
programme in terms of size and/or duration.
Let me now explain our assessment in greater detail, starting with the economic analysis. Euro
area real GDP increased by 0.5%, quarter on quarter, in the fourth quarter of 2016, following a
growth rate of 0.4% in the third quarter. Incoming data, notably survey results, bolster our
confidence that the ongoing economic expansion will continue to firm and broaden. The
passthrough of our monetary policy measures is supporting domestic demand and facilitates the
ongoing deleveraging process. The recovery in investment continues to benefit from very
favourable financing conditions and improvements in corporate profitability. Employment gains,
which are also benefiting from past labour market reforms, are supporting real disposable
income and private consumption. Moreover, the signs of a stronger global recovery and
increasing global trade suggest that foreign demand should increasingly add to the overall
resilience of the economic expansion in the euro area. However, economic growth continues to
be dampened by a sluggish pace of implementation of structural reforms, in particular in product
markets, and by remaining balance sheet adjustment needs in a number of sectors. The risks
surrounding the euro area growth outlook, while moving towards a more balanced configuration,
are still tilted to the downside and relate predominantly to global factors.
Headline inflation has been recovering from the very low levels seen in 2016, largely owing to
higher energy price increases. After reaching 2.0% in February 2017, euro area annual HICP
inflation stood at 1.5% in March. This reflected mainly lower energy and unprocessed food price
inflation, but also a decline in services price inflation. Looking ahead, on the basis of current
futures prices for oil, headline inflation is likely to increase in April and thereafter to hover around
current levels until the end of this year. However, as unutilised resources are still weighing on
domestic wage and price formation, measures of underlying inflation remain low and are
expected to rise only gradually over the medium term, supported by our monetary policy
measures, the expected continuing economic recovery and the corresponding gradual
absorption of slack.
Turning to the monetary analysis, broad money (M3) continues to expand at a robust pace, with
an annual rate of growth of 4.7% in February 2017, after 4.8% in January. As in previous months,
annual growth in M3 was mainly supported by its most liquid components, with the narrow
monetary aggregate M1 expanding at an annual rate of 8.4% in February 2017, unchanged from
the previous month.
The recovery in loan growth to the private sector observed since the beginning of 2014 is
proceeding. The annual growth rate of loans to non-financial corporations declined to 2.0% in
February 2017, from 2.3% in the previous month, while the annual growth rate of loans to
households remained broadly stable at 2.3% in February. At the same time, the euro area bank
lending survey for the first quarter of 2017 indicates that net loan demand has increased and
bank lending conditions have further eased across all loan categories. The pass-through of the
monetary policy measures put in place since June 2014 continues to significantly support
borrowing conditions for firms and households 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 a continued very substantial degree of
monetary accommodation to secure a sustained return of inflation rates towards levels that are
below, but close to, 2% without undue delay.
In order to reap the full benefits from our monetary policy measures, other policy areas must
contribute much more decisively to strengthening economic growth. The implementation of
structural reforms needs to be substantially stepped up to increase resilience, reduce
structural unemployment and boost productivity and potential output growth. Regarding fiscal
policies, all countries should intensify efforts towards achieving a more growth-friendly
composition of public finances. A full and consistent implementation of the Stability and Growth
Pact and of the macroeconomic imbalances procedure over time and across countries remains
crucial to enhance the resilience of the euro area economy.
We are now at your disposal for questions.