MNI: ECB Pres Mario Draghi Press Conference Statement - Text

     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:

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     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: les.commons@marketnews.com

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