|Draghi flags slow reforms as continuing risk to euro area growth, affirms policy stance
European Central Bank chief Mario Draghi said in Paris today that the ECB is ready to keep interest rates at present or lower levels for an extended period of time.
But Draghi cautioned that downside risks to economic growth remain. These risks include "global money and financial market conditions and related uncertainties.''
He cited higher commodity prices in the context of renewed geopolitical tensions, weaker-than-expected global demand, and slow or insufficient implementation of structural reforms in euro area countries, as other risks.
He noted that real GDP growth in the second quarter was positive after six quarters of negative output growth.
Earlier, the ECB's governing council voted to keep the bank's key refinancing rate steady at an all-time low of 0.50 percent.
The central bank also left its other two rates – the deposit rate and the marginal lending rate – at 0 percent and 1 percent respectively.
Dragi said the ECB's "monetary policy stance will remain accommodative for as long as necessary, in line with the forward guidance provided in July.''
He added that the governing council "confirms that it expects the key ECB interest rates to remain at present or lower levels for an extended period of time.''
This was based on "an unchanged overall subdued outlook for inflation extending into the medium term, given the broad-based weakness in the economy and subdued monetary dynamics.''
Referring to inflation, he said expects underlying price pressures to be subdued over the medium term.
“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 percent over the medium term.’’