mario draghi : hearing at the committee on economic and monetary affairs of the european parliament introductory statement by mr mario draghi, president of the european central bank, before the hearing at the committee on economic and monetary affairs of the european parliament, brussels, 21 june 2016. * * * mr chairman, honourable members of the economic and monetary affairs committee, ladies and gentlemen, i am grateful to be back speaking to your committee for the second hearing of this year. let me first say that the ecb takes note of today ’ s judgement of the federal german constitutional court. this judgement confirms the ruling of the court of justice of the european union which concluded that the omt programme is compatible with eu law and falls within our mandate. in my remarks today, i will review the state of the euro area recovery and the recent monetary policy measures adopted by the ecb. then, at the request of this committee, i will discuss the investment outlook, outlining in particular why more action is needed to boost investment demand in the euro area. economic outlook and the ecb ’ s monetary policy as regards economic developments, the recovery of the euro area economy gained momentum at the start of the year. it is expected to proceed at a moderate but steady pace, supported by solid domestic demand and the effective pass - through of our monetary policy measures to the real economy. consumers are benefiting from still relatively low oil prices and improved employment prospects. likewise, investment is edging up, supported by higher corporate profits and favourable financing conditions. looking forwards, according to the june 2016 eurosystem staff macroeconomic projections for the euro area, annual real gdp is expected to increase by 1. 6 % this year and by 1. 7 % in the next two years. at the same time, inflation dynamics in the euro area remain rather subdued. the rate of headline inflation was slightly negative in may and is expected to hover at low levels over the coming months. while lower oil prices continue to act as a drag on the annual headline inflation, domestic price pressures, notably from wage growth, also remain muted, reflecting persistent economic slack. according to the eurosystem staff projections, inflation should pick up towards the end of 2016. thereafter, inflation is expected to increase further to 1. 3 % in 2017 and to 1. 6 % in 2018, as a strengthening economic recovery mobilises unused resources. since the start of our credit easing measures in june 2014, bank lending rates for firms and households have fallen by about

are on the same page. innovation will only positively flourish when it occurs in the context of sound business operation and consumer protection as the underlying threads. the timing of your initiative for an overall banking system vision and roadmap could not have been more opportune. q3 gdp was announced just last week – 7. 1 pct growth, bringing to 71 the number of consecutive quarters of positive economic growth! domestic aggregate demand continues to be the driver of economic growth. on the supply side, manufacturing remained strong, services showed reasonable growth, and the agriculture sector showed signs of recovery. in other words, our economic growth drivers are diversifying! demography is also on our side. the median age of the population is now 24. 4 years old and we are projected to reach a median age of only 31 years old by 2045. all these have transpired without fuelling inflation. 1 / 3 bis central bankers'speeches we are certainly living in exciting times that are rife with opportunities. but even as i say this, we must also be aware that there are challenges to this operating environment. let me focus on just three. one, fed normalization. two, weak and uneven global growth outlook. three, disruptive technology. turning challenges into opportunities the anticipation of the timing of the fed ’ s next move creates near - term financial market volatility. the question whether markets will perceive the next fed pronounement as “ risk on ” or “ risk off ” matters for daily traders. the era of low us dollar interest rates is ending soon. that brings with it certain collateral actions, including a stronger us dollar and global portfolio rebalancing. we all know that making money on financial assets in a low / declining interest rate environment is a “ no - brainer ”. all fixed income assets you hold rise in value as interest rates fall. the test for bank presidents and treasurers alike therefore is how to translate these daily movements and market expectations into an overall strategy, as the tide of global monetary conditions change. this is undoubtedly tricky and timing strategic moves is critical. a second challenge to the operating environment is the continued weakness in global growth prospects. related to this is the trend among policy makers to look inwardly and tap domestic sources of demand. china is an example. the chinese authorities have shifted from trade to services as driver of growth. brexit is another example of the populace wanting to break away from trade. the protectionist - tendency of the prono