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Free AccessTEXT: ECB President Mario Draghi Press Conference Statement
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, 26 October 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 Commission
Vice-President, Mr Dombrovskis.
Based on our regular economic and monetary analyses, today we conducted a
thorough assessment of the outlook for inflation, the risks surrounding this
outlook and our monetary policy stance. As a result, the Governing Council took
the following decisions in pursuit of its price stability objective.
First, the key ECB interest rates were kept unchanged and 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.
Second, as regards non-standard monetary policy measures, we will continue
to make purchases under the asset purchase programme (APP) at the current
monthly pace of E60 billion until the end of December 2017. From January 2018
our net asset purchases are intended to continue 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.
Third, 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.
And fourth, we also decided to continue to conduct the main refinancing
operations and three-month longer-term refinancing operations as fixed rate
tender procedures with full allotment for as long as necessary, and at least
until the end of the last reserve maintenance period of 2019.
Today's monetary policy decisions were taken to preserve 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
recalibration of our asset purchases reflects growing confidence in the gradual
convergence of inflation rates towards our inflation aim, on account of the
increasingly robust and broad-based economic expansion, an uptick in measures of
underlying inflation and the continued effective pass-through of our policy
measures to the financing conditions of the real economy. At the same time,
domestic price pressures are still muted overall and the economic outlook and
the path of inflation remain conditional on continued support from monetary
policy. Therefore, 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 additional 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. The economic expansion in the euro area continues to be solid
and broad-based. Real GDP increased by 0.7%, quarter on quarter, in the second
quarter of 2017, after 0.6% in the first quarter. The latest data and survey
results point to unabated growth momentum in the second half of this year. Our
monetary policy measures have facilitated the deleveraging process and continue
to support domestic demand. Private consumption is underpinned by rising
employment, which is also benefiting from past labour market reforms, and by
increasing household wealth. The upswing in business investment continues to
benefit from very favourable financing conditions and improvements in corporate
profitability. Construction investment has also strengthened. In addition, the
broad-based global recovery is supporting euro area exports.
Risks surrounding the euro area growth outlook remain broadly balanced. On
the one hand, the strong cyclical momentum, as evidenced in recent developments
in sentiment indicators, could lead to further positive growth surprises. On the
other hand, downside risks continue to relate primarily to global factors and
developments in foreign exchange markets.
Euro area annual HICP inflation remained unchanged at 1.5% in September.
Looking ahead, on the basis of current futures prices for oil, annual rates of
headline inflation are likely to temporarily decline towards the turn of the
year, mainly reflecting base effects in energy prices. At the same time,
measures of underlying inflation have ticked up moderately since early 2017, but
have yet to show more convincing signs of a sustained upward trend. Wage growth
has increased somewhat, but domestic cost pressures still remain subdued
overall. Underlying inflation in the euro area is expected to continue to rise
gradually over the medium term, supported by our monetary policy measures, the
continuing economic expansion, the corresponding gradual 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 rate of growth of 5.1% in September 2017, after 5.0%
in August. As in previous months, annual growth in M3 was mainly supported by
its most liquid components, with the narrow monetary aggregate M1 expanding at
an annual rate of 9.7% in September 2017, up from 9.5% in August.
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 2.5% in September 2017, after 2.4% in
August, while the annual growth rate of loans to households remained stable at
2.7%. The euro area bank lending survey for the third quarter of 2017 indicates
that net loan demand has continued to increase for all loan categories. Credit
standards have further eased for loans to households, while they remained
broadly unchanged for loans to enterprises. Banks' overall terms and conditions
on new loans have continued to ease for all categories of loans.
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 to recalibrate the
policy instruments to ensure the degree of monetary accommodation necessary 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, 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 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: les.commons@marketnews.com
[TOPICS: M$X$$$,MC$$$$,M$$EC$]
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.