The president of the European Central Bank Mario Draghi, told critics of his stimulus path to be patient and wait for the euro zone’s recovery to take firm hold as the bank kept its super-easy monetary policy unchanged as expected.

the ECB kept its asset buys at a record pace and  its various rates at next to nothing or negative with growth slowly picking up pace. It reaffirmed that it was also ready to increase or extend it bond purchases if the outlook worsens and that rates would stay at their current or lower levels for an extended period.

“The recovery of all of the euro zone is in the interests of everybody, including Germany,” ECB President Mario Draghi told a news conference, responding to criticism, notably from Berlin, of his stimulus program.

“German savers have benefited not only as savers but also as borrowers, as entrepreneurs, as workers, like all the other citizens of the euro zone. So we have to be patient. As (the) recovery will firm up, real rates will go up.”

Draghi insisted a “very substantial degree” of monetary policy stimulus was needed and described the current euro zone recovery as “dampened by the sluggish pace of structural reform”.

There were still no real signs of a upward trend as underlying inflationary pressures remained subdued despite accounting for the base effect of rising oil prices, Draghi said.

Draghi said it was too early to assess what impact Britain’s planned exit from the European Union and its single market would have even while he warned that global risks to the euro zone economy were still slanted to the downside.

As the Federal Reserve gradually raises rates, underscoring diverging policy paths between Europe and the U.S., the recovery still relies heavily on ECB stimulus and markets could become more volatile.

But pointing to solid growth at the end of last year are facts like manufacturing activity accelerating, confidence indicators are firming and inflation hitting a three year high last month.

Pointing to the sort of resilience not seen since before the bloc’s debt crisis were indications like holding up of consumption despite rising energy costs, surging order books on export demand and euro zone business growth being the fastest in more than five years in December.

But the underlying picture is mixed.

Inflation is still just half of the bank’s 2 percent target and the jump is mostly down to higher oil prices.

The threat of more protectionist policies from the United States and possibly Britain could reverse market sentiment and the market euphoria after Donald Trump’s surprising U.S. election win is also yet to be backed up concrete policy action.

The ECB last month extended the 2.3 trillion euro scheme, known as quantitative easing, until the end of the year and agreed to cut its asset buys by a quarter from April.

Primarily as Germany heads toward an election in the fall and with Finance Minister Wolfgang Schaeuble often pointing the finger at the ECB for problems, the extension threatens to reignite tensions between the bank and Berlin.

(Adapted from Reuters)

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