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MNI (London)
     LONDON (MNI) - Below is the text released by the European Central Bank
Governing Council of President Mario Draghi's opening statement at the post
council meeting:
     Introductory statement to the press conference
     Mario Draghi, President of the ECB 
Vitor Constancio Vice-President of the ECB 
Frankfurt am Main, 08 March 2018
     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.
     Based on our regular economic and monetary analyses, we decided to keep the
key ECB interest rates unchanged. We continue to expect them to remain at their
present levels for an extended period of time, and well past the horizon of our
net asset purchases.
     Regarding non-standard monetary policy measures, we confirm that our net
asset purchases, at the current monthly pace of E30 billion, are intended to run
until the end of September 2018, or beyond, if necessary, and in any case until
the Governing Council sees a sustained adjustment in the path of inflation
consistent with its inflation aim. The Eurosystem will continue to reinvest the
principal payments from maturing securities purchased under the asset purchase
programme for an extended period of time after the end of its net asset
purchases, and in any case for as long as necessary. This will contribute both
to favourable liquidity conditions and to an appropriate monetary policy stance.
     Incoming information, including our new staff projections, confirms the
strong and broad-based growth momentum in the euro area economy, which is
projected to expand in the near term at a somewhat faster pace than previously
expected. This outlook for growth confirms our confidence that inflation will
converge towards our inflation aim of below, but close to, 2% over the medium
term. At the same time, measures of underlying inflation remain subdued and have
yet to show convincing signs of a sustained upward trend. In this context, the
Governing Council will continue to monitor developments in the exchange rate and
financial conditions with regard to their possible implications for the
inflation outlook. Overall, an ample degree of monetary stimulus remains
necessary for underlying inflation pressures to continue to build up and support
headline inflation developments over the medium term. This continued monetary
support is provided by the net asset purchases, by the sizeable stock of
acquired assets and the forthcoming reinvestments, and by our forward guidance
on interest rates.
     Let me now explain our assessment in greater detail, starting with the
economic analysis. Real GDP increased by 0.6%, quarter on quarter, in the fourth
quarter of 2017, after increasing by 0.7% in the third quarter. The latest
economic data and survey results indicate continued strong and broad-based
growth momentum. Our monetary policy measures, which have facilitated the
deleveraging process, continue to underpin domestic demand. Private consumption
is supported by rising employment, which is also benefiting from past labour
market reforms, and by growing household wealth. Business investment continues
to strengthen on the back of very favourable financing conditions, rising
corporate profitability and solid demand. Housing investment has improved
further over recent quarters. In addition, the broad-based global expansion is
providing impetus to euro area exports.
     This assessment is broadly reflected in the March 2018 ECB staff
macroeconomic projections for the euro area. These projections foresee annual
real GDP increasing by 2.4% in 2018, 1.9% in 2019 and 1.7% in 2020. Compared
with the December 2017 Eurosystem staff macroeconomic projections, the outlook
for real GDP growth has been revised up for 2018 and remains unchanged for 2019
and 2020.
     The risks surrounding the euro area growth outlook are assessed as broadly
balanced. On the one hand, the prevailing positive cyclical momentum could lead
to stronger growth in the near term. On the other hand, downside risks continue
to relate primarily to global factors, including rising protectionism and
developments in foreign exchange and other financial markets.
     According to Eurostat's flash estimate, euro area annual HICP inflation
decreased to 1.2% in February 2018, from 1.3% in January. This reflected mainly
negative base effects in unprocessed food price inflation. Looking ahead, on the
basis of current futures prices for oil, annual rates of headline inflation are
likely to hover around 1.5% for the remainder of the year. Measures of
underlying inflation remain subdued overall. Looking forward, they are expected
to rise gradually over the medium term, supported by our monetary policy
measures, the continuing economic expansion, the corresponding absorption of
economic slack and rising wage growth.
     This assessment is also broadly reflected in the March 2018 ECB staff
macroeconomic projections for the euro area, which foresee annual HICP inflation
at 1.4% in 2018, 1.4% in 2019 and 1.7% in 2020. Compared with the December 2017
Eurosystem staff macroeconomic projections, the outlook for headline HICP
inflation has been revised down slightly for 2019 and remains unchanged for 2018
and 2020.
     Turning to the monetary analysis, broad money (M3) continues to expand at a
robust pace, with an annual rate of growth of 4.6% in January 2018, unchanged
from the previous month, reflecting the impact of the ECB's monetary policy
measures and the low opportunity cost of holding the most liquid deposits.
Accordingly, the narrow monetary aggregate M1 remained the main contributor to
broad money growth, continuing to expand at a solid annual rate.
     The recovery in the growth of loans to the private sector observed since
the beginning of 2014 is progressing. The annual growth rate of loans to
non-financial corporations strengthened to 3.4% in January 2018, after 3.1% in
December 2017, while the annual growth rate of loans to households remained
unchanged at 2.9%. The pass-through of the monetary policy measures put in place
since June 2014 continues to significantly support borrowing conditions for
firms and households, access to financing ? notably for small and medium-sized
enterprises ? and credit flows across the euro area.
     To sum up, a cross-check of the outcome of the economic analysis with the
signals coming from the monetary analysis confirmed the need for an ample degree
of monetary accommodation to secure a sustained return of inflation rates
towards levels that are below, but close to, 2% over the medium term.
     In order to reap the full benefits from our monetary policy measures, other
policy areas must contribute decisively to raising the longer-term growth
potential and reducing vulnerabilities. The implementation of structural reforms
in euro area countries needs to be substantially stepped up to increase
resilience, reduce structural unemployment and boost euro area productivity and
growth potential. Against the background of overall limited implementation of
the 2017 country-specific recommendations, as communicated by the European
Commission yesterday, greater reform effort is necessary in the euro area
countries. Regarding fiscal policies, the increasingly solid and broad-based
expansion calls for rebuilding fiscal buffers. This is particularly important in
countries where government debt remains high. All countries would benefit from
intensifying efforts towards achieving a more growth-friendly composition of
public finances. A full, transparent and consistent implementation of the
Stability and Growth Pact and of the macroeconomic imbalance procedure over time
and across countries remains essential to increase the resilience of the euro
area economy. Deepening Economic and Monetary Union remains a priority. The
Governing Council urges specific and decisive steps to complete the banking
union and the capital markets union.
     We are now at your disposal for questions.
--MNI London Bureau; tel: +44 203-586-2225; email:
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