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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, 14 December 2017
     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, which was also attended by the President of
the Eurogroup, Mr Dijsselbloem, and by the Commission Vice-President, Mr
     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 from
January 2018 we intend to continue to make net asset purchases under the asset
purchase programme (APP), at a monthly pace of E30 billion, 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. If the outlook becomes less favourable, or if financial
conditions become inconsistent with further progress towards a sustained
adjustment in the path of inflation, we stand ready to increase the APP in terms
of size and/or duration. The Eurosystem will reinvest the principal payments
from maturing securities purchased under the APP 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.
     Our monetary policy decisions have preserved the very favourable financing
conditions that are still needed for a sustained return of inflation rates
towards levels that are below, but close to, 2%. The incoming information,
including our new staff projections, indicates a strong pace of economic
expansion and a significant improvement in the growth outlook. The strong
cyclical momentum and the significant reduction of economic slack give grounds
for greater confidence that inflation will converge towards our inflation aim.
At the same time, domestic price pressures remain muted overall and have yet to
show convincing signs of a sustained upward trend. An ample degree of monetary
stimulus therefore 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 additional net asset
purchases that we decided on at our October monetary policy meeting, 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. The economic expansion in the euro area continued in the
third quarter of 2017, when real GDP increased by 0.6% quarter on quarter, after
0.7% in the second quarter. The latest data and survey results point to solid
and broad-based growth momentum. Our monetary policy measures, which have
facilitated the deleveraging process, continue to support domestic demand.
Private consumption is underpinned by ongoing employment gains, which are also
benefiting from past labour market reforms, and by rising household wealth.
Business investment continues to strengthen on the back of very favourable
financing conditions, rising corporate profitability and strengthening demand.
Housing investment has also risen further over recent quarters. In addition,
euro area exports are being supported by the broad-based global expansion.
     This assessment is broadly reflected in the December 2017 Eurosystem staff
macroeconomic projections for the euro area. These projections foresee annual
real GDP increasing by 2.4% in 2017, 2.3% in 2018, 1.9% in 2019 and 1.7% in
2020. Compared with the September 2017 ECB staff macroeconomic projections, the
outlook for real GDP growth has been revised up substantially.
     Risks surrounding the euro area growth outlook remain broadly balanced. On
the one hand, the strong cyclical momentum, underpinned by continued positive
developments in sentiment indicators, could lead to further positive growth
surprises in the near term. On the other hand, downside risks continue to relate
primarily to global factors and developments in foreign exchange markets.
     According to Eurostat's flash estimate, euro area annual HICP inflation was
1.5% in November, up from 1.4% in October. At the same time, measures of
underlying inflation have moderated somewhat recently, in part owing to special
factors. Looking ahead, on the basis of current futures prices for oil, annual
rates of headline inflation are likely to moderate in the coming months, mainly
reflecting base effects in energy prices, before increasing again. Underlying
inflation is 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 December 2017 Eurosystem
staff macroeconomic projections for the euro area, which foresee annual HICP
inflation at 1.5% in 2017, 1.4% in 2018, 1.5% in 2019 and 1.7% in 2020. Compared
with the September 2017 ECB staff macroeconomic projections, the outlook for
headline HICP inflation has been revised up, mainly reflecting higher oil and
food prices.
     Turning to the monetary analysis, broad money (M3) continues to expand at a
robust pace, with an annual rate of growth of 5.0% in October 2017, from 5.2% in
September, 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 continued to be the main contributor to broad money
growth, expanding at an annual rate of 9.4% in October, after 9.8% in September.
     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 increased to 2.9% in October 2017, after 2.4% in
September, while the annual growth rate of loans to households remained stable
at 2.7%.
     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%.
     In order to reap the full benefits from our monetary policy measures, other
policy areas must contribute decisively to strengthening the longer-term growth
potential and reducing vulnerabilities. The implementation of structural reforms
in all euro area countries needs to be substantially stepped up to increase
resilience, reduce structural unemployment and boost euro area productivity and
growth potential. Regarding fiscal policies, the increasingly solid and
broad-based expansion strengthens the case 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. Strengthening
Economic and Monetary Union remains a priority. The Governing Council welcomes
the ongoing discussions on completing the banking union and the capital markets
union, and on further enhancing the institutional architecture of our Economic
and Monetary Union.
     We are now at your disposal for questions
--MNI London Bureau; tel: +44 203-586-2225; email:
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