Draghi Says QE Proceeding Smoothly, Sees Gradual Strengthening In Recovery

Draghi 041515

The European Central Bank's massive asset purchase programme is proceeding smoothly and is having an impact on economic activity, which is expected to gradually strengthen in the months ahead, the bank's chief Mario Draghi said Wednesday.

In his customary post-decision press conference in Frankfurt, Draghi said, "The implementation of our asset purchase programmes is proceeding smoothly, with volumes in line with the announced figure of EUR 60 billion of securities per month."

"In addition, there is clear evidence that the monetary policy measures we have put in place are effective," he said.

A recent survey from the ECB showed this week that Eurozone banks said they used the additional liquidity from the stimulus boost over the past six months, mainly for granting loans and plan to do so also in the coming months.

"The monetary policy measures we have put in place should support further improvements both in borrowing costs for firms and households and in credit flows across the euro area," Draghi said.

Draghi reiterated that asset purchases are intended to run until the end of September 2016 and, in any case, until there is a sustained adjustment in the path of inflation that is consistent with the ECB's aim of achieving inflation rates below, but close to, 2 percent over the medium term.

ECB Governing Council decided to leave interest rates unchanged for a sixth straight session, earlier today. The refinancing rate was left unchanged at a record low 0.05 percent.

Draghi's press conference was interrupted briefly in the beginning after a protester jumped onto the podium shouting "End ECB dictatorship".

Answering questions from reporters, Draghi expressed surprise at the speculation that the ECB may mull an early exit to its quantitative easing programme.

Draghi also dismissed worries over programme implementation, calling them 'premature'. He also said that the programme was flexible enough to be adjusted, if circumstances require.

"Looking ahead, our focus will be on the full implementation of our monetary policy measures," Draghi said in his introductory statement.

"Through these measures, we will contribute to a further improvement in the economic outlook, a reduction in economic slack and a recovery in money and credit growth."

Further, the ECB President said the euro area economic activity has gained momentum since last year and the bank expects recovery to broaden and strengthen gradually.

That said, the euro area recovery is likely to continue to be dampened by the necessary balance sheet adjustments in a number of sectors and the sluggish pace of implementation of structural reforms, he added. Risks surrounding the euro area economic outlook have become more balanced, Draghi noted.

The ECB expects inflation to rise later this year and to pick up further during 2016 and 2017. While monitoring the risks to the inflation outlook, policymakers will focus in particular on the pass-through of our monetary policy measures, as well as on geopolitical, exchange rate and energy price developments.

Regarding Greece, Draghi said haircuts on Greek debt as collateral was mentioned during the policy session, but was not discussed. He said the Governing Council will take it up in due time.

He sought a credible prospect for a successful conclusion of the Greek economic reforms for the ECB to reinstate the waiver for the country's bonds. Draghi also said there was no evidence of a bubble, but the bank will closely monitor developments.

The ECB Chief reiterated that the bank will not lower the deposit rate further. The rate is currently at -0.20 percent.

The euro exchange rate is not a policy target, Draghi reiterated. The current exchange rate was the outcome of different policy and business cycles, he said.

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