mario draghi : hearing of the committee on economic and monetary affairs of the european parliament introductory statement by mr mario draghi, president of the european central bank, at the econ committee of the european parliament, brussels, 24 september 2018. * * * mr chairman, honourable members of the economic and monetary affairs committee, ladies and gentlemen, it is a pleasure to be back at the european parliament before your committee. ten years ago, the euro area entered a severe recession. that crisis exposed structural weaknesses and forced us to address them. the work is not yet over, but we are reaping the benefits of our efforts : growth has been positive for more than five years, and the unemployment rate is at its lowest level since november 2008. in my remarks today, i will discuss the current economic environment and the role that the ecb ’ s monetary policy plays in it. at the request of your committee, i will also discuss central bank communication, which nowadays forms an integral part of monetary policy. the euro area outlook the information that has become available since my last visit in july broadly confirms an ongoing broad - based expansion of the euro area economy, which grew by 0. 4 % in the second quarter of 2018. despite some moderation following the strong growth performance in 2017, the economy continues to exhibit high levels of capacity utilisation, and labour markets are tightening with signs of labour shortages in some countries and sectors. this is reflected in the unemployment rate in the euro area, which stood at 8. 2 % in july. since reaching a trough five years ago, euro area employment has increased by about 9. 2 million. on account of the improving labour market and overall conditions, households ’ disposable income in the euro area is currently growing at the highest rates observed in the last ten years. higher income supports private consumption, which is expected to increase by 1. 5 % in 2018. these factors, together with business investment being fostered by the favourable financing conditions, rising corporate profitability and solid demand, continue to support spending. looking ahead, the latest ecb staff macroeconomic projections confirm the outlook for continued broad - based growth of the euro area economy. average annual growth is foreseen to be 2. 0 % in 2018, 1. 8 % in 2019 and 1. 7 % in 2020, with a slight downward revision for 2018 and 2019, mainly reflecting weaker global trade. risks surrounding the euro area outlook can still be viewed as broadly balanced, although the

ecb interest rates, which we expect to remain at present levels at least through the summer next year, and in any case for as long as necessary to ensure the continued convergence of inflation towards our aim ; second, the residual net asset purchases that we will be conducting until the end of this year ; and third, the reinvestment of the sizeable stock of acquired securities. our monetary policy measures have made a very substantial contribution to the positive economic developments in the euro area. if we consider all the policy measures taken since mid2014, our staff estimates show that the overall impact on euro area real gdp growth and euro area inflation is – in both cases – around 1. 9 percentage points cumulatively between 2016 and 2020. importance of central bank communication let me now turn to the topic of central bank communication that you suggested for today ’ s meeting. regarding this topic, forward guidance has indeed become an important instrument for all major central banks as conventional monetary tools have reached their effective lower bound, and the ecb is no exception. forward guidance on our policy interest rates has evolved considerably over time, since we first introduced it in july 2013. roughly speaking, it has gone through three phases. when we first gave forward guidance in 2013, our goal was to insulate euro area financing conditions, and especially the near - term segment of the term structure of money market interest rates, from the heightened volatility emanating from the us money market as a result of the “ taper tantrum ” episode of may - june 2013. during the second phase, our forward guidance served to reinforce the effectiveness of the net asset purchases. by expressing the governing council ’ s expectations about the likely future path of interest rates, we ensured that the downward impact that the asset purchases were exerting on longer - term yields was not counteracted by unanchored market expectations of short - term 2 / 4 bis central bankers'speeches interest rate increases. since june 2018 we have expressed our expectation that, subject to incoming data confirming our medium - term inflation outlook, net purchases will likely end after december 2018. as we had for some time tied the horizon for our rate path to the end of our net purchases – giving indications that interest rates will remain at their present levels “ well past the end of our net purchases ” – announcing a conditional plan for terminating net purchases by a certain date made it necessary for us to re - anchor the rate guidance. steering expectations of the policy rate path was critical because the