While primarily weak wage growth, which clearly indicated that there was a lack of durability of inflation, caused the underlying inflation trend to remain subdued in the euro area, there was clear improvement in the growth outlook for the euro area, said the European Central Bank (ECB) President Mario Draghi on Friday in Frankfurt.
There is need for raising the underlying inflation pressures and creating a support base for the headline inflation over the medium term and fort his purpose there is a necessity of drawing up and delivering ample degree of monetary stimulus to the economy, stressed Draghi while he delivered a keynote speech at the 27th Frankfurt European Banking Congress.
“We are not yet at a point where the recovery of inflation can be self-sustained without our accommodative policy,” he said while underlining that cheap money provided by the ECB was still heavily supporting the very favourable financing conditions facing firms and households which in turn is the key motor of the economic recovery of the region.
Three weeks ago, the ECB announced the extension of the repurchase of the bonds that it makes every month till September of next year or beyond even though it had, at the same time, decided to cut the level of monthly bonds purchased from January 2018.
Sending a signal of “our growing confidence in the euro area economy” was the aim of the recalibration of asset purchases, Draghi said.
The euro area is seen to be undergoing a period of solid economic expansion riding on the back of positive economic growth for 18 straight quarters.
“We have increasing confidence that the recovery is robust and that this momentum will continue going forward,” Draghi said.
He however said: “we must be patient and persistent for inflation to return sustainably to our objective”, is what the latest monetary policy decisions made by the ECB showed, he reminded.
Providing of a platform and a forum that enables an open and forward oriented discussion about the issues in European Union, and the role of the EU in the world of politics and the global financial markets is the aim of the annual Frankfurt European Banking Congress that is hosted by Deutsche Bank, Commerzbank, BNP Paribas and Frankfurt Government.
This year’s congress discussed in detail several contemporary issues such including impact of degloblalization and enhancing of the competitiveness of the European banking sector.
(Adapted from News.xinhuanet.com)