mario draghi : ecb press conference – introductory statement introductory statement by mr mario draghi, president of the european central bank, and mr vitor constancio, vice - president of the european central bank, frankfurt am main, 4 july 2013. * * * 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. rehn. based on our regular economic and monetary analyses, we decided to keep the key ecb interest rates unchanged. incoming information has confirmed our previous assessment. underlying price pressures in the euro area are expected to remain subdued over the medium term. in keeping with this picture, monetary and, in particular, credit dynamics remain subdued. inflation expectations for the euro area continue to be firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2 % over the medium term. at the same time, recent confidence indicators based on survey data have shown some further improvement from low levels. our monetary policy stance is geared towards maintaining the degree of monetary accommodation warranted by the outlook for price stability and promoting stable money market conditions. it thereby provides support to a recovery in economic activity later in the year and in 2014. looking ahead, our monetary policy stance will remain accommodative for as long as necessary. the governing council expects the key ecb interest rates to remain at present or lower levels for an extended period of time. this expectation is based on the overall subdued outlook for inflation extending into the medium term, given the broad - based weakness in the real economy and subdued monetary dynamics. in the period ahead, we will monitor all incoming information on economic and monetary developments and assess any impact on the outlook for price stability. let me now explain our assessment in greater detail, starting with the economic analysis. real gdp declined by 0. 3 % in the first quarter of 2013, following a contraction of 0. 6 % in the last quarter of 2012. at the same time, labour market conditions remain weak. recent developments in cyclical indicators, particularly those based on survey data, indicate some further improvement from low levels. looking ahead to later in the year and to 2014, euro area export growth should benefit from a gradual recovery in global demand, while domestic demand should be supported by the accommodative monetary policy stance as well as the recent gains

for the period running from the first quarter of 1995 to the last quarter of 2019 ( i. e. excluding the period of the covid - 19 crisis ). “ smoothed ” refers to centred three - period moving averages of the estimated semi - elasticities, excluding the initial and final points. the dashed lines refer to the 90 % confidence bands. credit conditions turning to the bank lending channel and bank funding costs ( chart 17 ), yields on euro area bank bonds have increased substantially, by more than 300 basis points, since december 2021. at the same time, the large amount of outstanding bank bonds at fixed rates with longer maturities dampens the impact of the yield increase on bank funding costs. chart 17 : average bank funding costs of euro area banks ( percentages per annum ) sources : ecb ( mir, bsi ), ihs markit iboxx and ecb calculations. notes : the composite funding cost is the weighted average of the cost of deposits and market debt funding, with the respective outstanding amounts on bank balance sheets used as weights. deposit rates are on new business. the latest available data for deposit rates has been used, in order to extend the time interval of consideration up to the latest available date for bank bond yields. latest observation : august 2022 for bsi and mir ; 7 october 2022 for iboxx. compared with the rise in market rates, the adjustment in the rates on deposits – which are a stable funding source for banks, amounting to a third of their liabilities – has been more sluggish and this has contributed to containing the increase in bank funding costs so far. in some euro area countries, deposit rates were negative during recent years – providing evidence that monetary policy transmission also works in a negative rate environment – and are now coming back into positive territory. [ 37 ] in addition, the outstanding funds in the ecb ’ s targeted lending programme ( tltros ) are still dampening the increase in bank funding costs. [ 38 ], the recent monetary policy rate hikes, combined with the expectation of future rate increases, have been substantially passed through to lending rates applied to new borrowing ( and variable - rate loans ). lending rates on new mortgages started to increase early on at the beginning of this year, leading to a substantial increase of about 100 basis points from december 2021 up to august 2022, closely tracking long - term market rate developments ( chart 18 ). this represents the largest increase over a corresponding eight -