Tags: draghi | ecb | stimulus | bank of england

Draghi: Officials 'Aren't There Yet' as ECB Keeps Stimulus

Draghi: Officials 'Aren't There Yet' as ECB Keeps Stimulus
Getty/Sean Gallup

Thursday, 20 July 2017 09:31 AM

Mario Draghi said policy makers are still waiting for the region’s economic recovery to foster the sustainable price stability they are seeking.

“While the ongoing economic expansion provides confidence that inflation will gradually glide toward levels in line with the inflation aim, it has yet to translate into stronger inflation dynamics,” the European Central Bank president told reporters at a news conference after a monetary policy meeting in Frankfurt on Thursday. “A very substantial degree of monetary accommodation is still needed for underlying inflation pressures to gradually build up.”

Draghi read out an assessment of the economic outlook that was very similar to the one he offered in June, when he called for colleagues to be patient and allow the central bank’s stimulus time to work. With less than half a year left of quantitative easing under the current program, policy makers have been debating publicly as to when they might start winding down asset purchases.

“We took stock of the continuing improvement in growth momentum, but also of fact that inflation rate is still subdued,” Draghi said. “We need to be persistent and patient and prudent, because we’re not there yet.”

The ECB president’s comments follow what seemed to be a shift in stance three weeks ago during a speech in Sintra, when he said that renewed reflationary forces may provide room for “adjusting the parameters” of current stimulus, while keeping the level of accommodation broadly unchanged.

Economists predict the first official decision on the future of the ECB’s policy path to be announced in September, when the Governing Council next meets and publishes projections on the economic outlook. In preparation for that, ECB staff are already studying various options for how bond-buying might eventually be wound down, according to euro-area officials familiar with the matter.

Earlier on Thursday, policy makers kept their language on quantitative easing unchanged, retaining a pledge to increase the program in size or duration if warranted. Economists had been split over whether they might remove it after the Governing Council in June discussed scrapping that part of the monetary policy statement.

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Mario Draghi said policy makers are still waiting for the region's economic recovery to foster the sustainable price stability they are seeking.
draghi, ecb, stimulus, bank of england
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2017-31-20
Thursday, 20 July 2017 09:31 AM
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