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

in real income owing to generally lower inflation. furthermore, notwithstanding recent developments, the overall improvements in financial markets seen since last summer should work their way through to the real economy, as should the progress made in fiscal consolidation. this being said, the remaining necessary balance sheet adjustments in the public and private sectors will continue to weigh on economic activity. overall, euro area economic activity should stabilise and recover in the course of the year, albeit at a subdued pace. the risks surrounding the economic outlook for the euro area continue to be on the downside. the recent tightening of global money and financial market conditions and related uncertainties may have the potential to negatively affect economic conditions. other downside risks include the possibility of weaker than expected domestic and global demand and slow or insufficient implementation of structural reforms in euro area countries. as stated in previous months, annual inflation rates are expected to be subject to some volatility throughout the year owing particularly to base effects. according to eurostat ’ s flash estimate, euro area annual hicp inflation was 1. 6 % in june 2013, up from 1. 4 % in may. this increase reflected an upward base effect relating to energy price developments twelve months earlier. however, underlying price pressures are expected to remain subdued over bis central bankers ’ speeches the medium term, reflecting the broad - based weakness in aggregate demand and the modest pace of the recovery. medium - term inflation expectations remain firmly anchored in line with price stability. the risks to the outlook for price developments are expected to be still broadly balanced over the medium term, with upside risks relating to stronger than expected increases in administered prices and indirect taxes, as well as higher commodity prices, and downside risks stemming from weaker than expected economic activity. turning to the monetary analysis, recent data confirm the subdued monetary and, in particular, credit dynamics. annual growth in broad money ( m3 ) decreased in may to 2. 9 %, from 3. 2 % in april. moreover, annual growth in m1 decreased to 8. 4 % in may, from 8. 7 % in april. the annual rate of change of loans to the private sector remained negative. while the annual growth rate of loans to households ( adjusted for loan sales and securitisation ) remained at 0. 3 % in may, broadly unchanged since the turn of the year, the annual rate of change of loans to non - financial corporations ( adjusted for loan sales and securitisation ) weakened further to – 2. 1 % in may,