European Central Bank President Mario Draghi said on Friday that inflation expectations remain well anchored and there is no inflation risk in any euro area country.
"Should risks to price stability emerge, the Eurosystem has sufficient tools at its disposal to absorb excess liquidity," Draghi said in a speech at the 14th ECB Watchers Conference in Frankfurt.
"Price stability will remain a cornerstone of economic and monetary union," he added.
Political choices are dominating the monetary policy, Draghi told the conference. The Eurosystem will continue to supply liquidity to solvent banks where needed, he reiterated.
He also noted that the objectives of the ECB's three-year long term financing operations or LTROs have been 'broadly met'. Citing evidence from the April bank lending survey, Draghi said supply side constraints on bank credit have been removed.
"The full supportive impact of the three-year LTROs needs time to unfold," the central bank chief said.
"In the current environment of very weak credit demand and heightened risk aversion, a rebound in the volume of credit will be particularly slow."
by RTT Staff Writer
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