The European Central Bank needs to remain patient and persistent as euro area inflation trends are yet to show any convincing convergence towards the bank's target, ECB Executive Board Member and Chief Economist Peter Praet said Tuesday.
"Our mission is not yet accomplished. We need patience and persistence," Praet said at an event in Rome.
"We need to be patient, because inflation convergence needs more time to show through convincingly in the data."
Praet pointed out that measured inflation remains exceedingly volatile and metrics of underlying price pressures continue to be subdued.
"The entire distribution of inflation expectations still needs to shift a fair distance to the right," he said.
"And we need to be persistent, because the baseline scenario for future inflation remains crucially contingent on very easy financing conditions which, to a large extent, depend on the current accommodative monetary policy stance," he added, echoing ECB President Mario Draghi's comments from last week.
ECB policymakers are apparently trying to damp market expectations of a tapering move that were fueled by Draghi's remarks on June 27.
The ECB Chief said the bank can support the euro area economic recovery by adjusting the parameters of its policy instruments as deflation risks have disappeared and reflationary pressures are at play. But, he stressed that such tweaks must be gradual and need to be taken with prudence, and policy needs to be persistent.
Draghi comments at Sintra, Portugal sent the euro and bond yields higher as they were construed as signals that the ECB was ready to wind down its massive stimulus, which is a mix of EUR 2.3 trillion asset purchases and ultra-low interest rates.
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