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MNI (London)
     LONDON (MNI) - Below is the text of the Introductory Statement at the press
conference following the January 24 Governing Council meeting, released by the
European Central Bank.
     December 13
     Mario Draghi, President of the ECB 
     Luis de Guindos, Vice-President of the ECB 
     Frankfurt am Main 
     24 January 2019 
     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 Commission
Vice-President, Mr Dombrovskis.
     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 at least through the summer of 2019, and in any case for as long
as necessary to ensure the continued sustained convergence of inflation to
levels that are below, but close to, 2% over the medium term.
     Regarding non-standard monetary policy measures, we intend to continue
reinvesting, in full, the principal payments from maturing securities purchased
under the asset purchase programme for an extended period of time past the date
when we start raising the key ECB interest rates, and in any case for as long as
necessary to maintain favourable liquidity conditions and an ample degree of
monetary accommodation.
     The incoming information has continued to be weaker than expected on
account of softer external demand and some country and sector-specific factors.
The persistence of uncertainties in particular relating to geopolitical factors
and the threat of protectionism is weighing on economic sentiment. At the same
time, supportive financing conditions, favourable labour market dynamics and
rising wage growth continue to underpin the euro area expansion and gradually
rising inflation pressures. This supports our confidence in the continued
sustained convergence of inflation to levels that are below, but close to, 2%
over the medium term. Significant monetary policy stimulus remains essential to
support the further build-up of domestic price pressures and headline inflation
developments over the medium term. This will be provided by our forward guidance
on the key ECB interest rates, reinforced by the reinvestments of the sizeable
stock of acquired assets. In any event, the Governing Council stands ready to
adjust all of its instruments, as appropriate, to ensure that inflation
continues to move towards the Governing Council's inflation aim in a sustained
     Let me now explain our assessment in greater detail, starting with the
economic analysis. Euro area real GDP increased by 0.2%, quarter on quarter, in
the third quarter of 2018, following growth of 0.4% in the previous two
quarters. Incoming data have continued to be weaker than expected as a result of
a slowdown in external demand compounded by some country and sector-specific
factors. While the impact of some of these factors is expected to fade, the
near-term growth momentum is likely to be weaker than previously anticipated.
Looking ahead, the euro area expansion will continue to be supported by
favourable financing conditions, further employment gains and rising wages,
lower energy prices, and the ongoing - albeit somewhat slower - expansion in
global activity.
     The risks surrounding the euro area growth outlook have moved to the
downside on account of the persistence of uncertainties related to geopolitical
factors and the threat of protectionism, vulnerabilities in emerging markets and
financial market volatility.
     Euro area annual HICP inflation declined to 1.6% in December 2018, from
1.9% in November, reflecting mainly lower energy price inflation. On the basis
of current futures prices for oil, headline inflation is likely to decline
further over the coming months. Measures of underlying inflation remain
generally muted, but labour cost pressures are continuing to strengthen and
broaden amid high levels of capacity utilisation and tightening labour markets.
Looking ahead, underlying inflation is expected to increase over the medium
term, supported by our monetary policy measures, the ongoing economic expansion
and rising wage growth.
     Turning to the monetary analysis, broad money (M3) growth moderated to 3.7%
in November 2018, after 3.9% in October. M3 growth continues to be backed by
bank credit creation. The narrow monetary aggregate M1 remained the main
contributor to broad money growth.
     The annual growth rate of loans to non-financial corporations stood at 4.0%
in November 2018, after 3.9% in October, while the annual growth rate of loans
to households remained broadly unchanged at 3.3%. The euro area bank lending
survey for the fourth quarter of 2018 suggests that overall bank lending
conditions remained favourable, following an extended period of net easing, and
demand for bank credit continued to rise, thereby underpinning loan growth.
     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 - in particular 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 that an ample degree of
monetary accommodation is still necessary for the continued sustained
convergence of inflation to 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 more 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. Regarding fiscal policies, the Governing Council reiterates
the need for rebuilding fiscal buffers. This is particularly important in
countries where government debt is high and for which full adherence to the
Stability and Growth Pact is critical for safeguarding sound fiscal positions.
Likewise, the transparent and consistent implementation of the EU's fiscal and
economic governance framework over time and across countries remains essential
to bolster the resilience of the euro area economy. Improving the functioning of
Economic and Monetary Union remains a priority. The Governing Council welcomes
the ongoing work and urges further 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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