UPDATE: Draghi - See No Sign Low Rates Boost Debt in Euro Area

By Christian Vits

     WASHINGTON(MNI) - The European Central Bank rebuffed the idea that the

current low interest rates lead or have led to higher debt levels in the

currency bloc, ECB President Mario Draghi said Saturday.

     "We don't have any evidence that our low interest rates have caused a rise

in debt," Draghi said in a press briefing in Washington. "I don't see any

dramatic rise in debt," he added.

     "The low rates should be used to favour consolidation," Draghi said. "It is

a positive situation, a good opportunity to undertake structural reforms and

correct weaknesses we saw when the financial crisis hit the world."

     With regard to the upcoming monetary policy meeting on October 26, Draghi

said that "it's likely that the bulk of decisions will be taken in October. But

it's my personal assessment, the assessment of the Governing Council was more

cautious."

     The ECB is expected to announce at its next monetary policy meeting on Oct.

26 whether and when it intends to cut its stimulus measures. 

     So far, the bank has been reluctant to wind down its quantitative easing as

inflation is still well below the ECB's target of "below but close to" 2

percent. It held steady in September at 1.5%, unchanged from the previous month.

     Draghi underlined that the economic recovery in the euro zone is

continuing. "The recovery is broad across countries," he said. "It is also a

robust recovery as it is based on consumption and investment and less on

exports," he explained.

     In its World Economic Outlook, the International Monetary Fund forecast

that the euro-area economy will grow by 2.1% this year and 1.9% in 2018. That

compares with a forecast of 1.7% and 1.6% respectively in the April WEO Outlook

update.

     "We are confident as the conditions will continue to improve, the inflation

rate will converge in a self-sustained manner to our objective. But we should

also be patient, because it is going to take time," Draghi stressed.

--MNI Frankfurt Bureau; +49 69 97782671; email: christian.vits@marketnews.com

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