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:

     ===========================================================================

     Mario Draghi, President of the ECB, 

Vitor Constancio, Vice-President of the ECB, 

     Frankfurt am Main, 26 April 2018 

     INTRODUCTORY STATEMENT 

     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.

     Following several quarters of higher than expected growth, incoming

information since our meeting in early March points towards some moderation,

while remaining consistent with a solid and broad-based expansion of the euro

area economy. The underlying strength of the euro area economy continues to

support 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 other 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 ongoing and

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 0.7%, quarter on quarter, in the fourth

quarter of 2017, following similar growth in the previous quarter. This resulted

in an average annual growth rate of 2.4% in 2017 - the highest since 2007. The

latest economic indicators suggest some moderation in the pace of growth since

the start of the year. This moderation may in part reflect a pull-back from the

high pace of growth observed at the end of last year, while temporary factors

may also be at work. Overall, however, growth is expected to remain solid and

broad-based. Our monetary policy measures, which have facilitated the

deleveraging process, should continue to underpin domestic demand. Private

consumption is supported by ongoing employment gains, which, in turn, partly

reflect 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

continues to improve. In addition, the broad-based global expansion is providing

impetus to euro area exports.

     The risks surrounding the euro area growth outlook remain broadly balanced.

However, risks related to global factors, including the threat of increased

protectionism, have become more prominent.

     Euro area annual HICP inflation increased to 1.3% in March 2018, from 1.1%

in February. This reflected mainly higher food price inflation. 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 ahead, 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.

     Turning to the monetary analysis, broad money (M3) continues to expand at a

robust pace, with an annual growth rate of 4.2% in February 2018, slightly below

the narrow range observed since mid-2015. M3 growth continues to reflect 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 proceeding. The annual growth rate of loans to

non-financial corporations stood at 3.1% in February 2018, after 3.4% in January

and 3.1% in December 2017, while the annual growth rate of loans to households

remained unchanged at 2.9%. The euro area bank lending survey for the first

quarter of 2018 indicates that loan growth continues to be supported by

increasing demand across all loan categories and a further easing in overall

bank lending conditions for loans to enterprises and loans for house purchase.

     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, greater reform effort is necessary in

euro area countries. Regarding fiscal policies, the ongoing 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. Improving the functioning of 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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