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ECB's Draghi Says Eurozone Recovery To Continue, Inflation To Hit Target

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Euro area economic recovery is now firm and broad-based, and the latest data suggest that the momentum is set to continue in the period ahead and policymakers are more confident that inflation will converge at the target eventually, European Central Bank President Mario Draghi said Monday.

"The ongoing recovery is, crucially, driven by domestic forces, and the labor market has notably improved," Draghi said at a hearing at the European Parliament in Brussels.

"The domestic drivers are making the recovery more robust and resilient to adverse external influences," he said.

Draghi also said that the employment gains and the rising household wealth are supporting the private consumption outlook. Further, investment is improving, thanks to very favorable financing conditions, he added.

The euro area economy has now grown for 17 successive quarters.

Yet, the firm economic recovery still needs to translate more convincingly into stronger inflation dynamics, Draghi reiterated.

"Overall, we are becoming more confident that inflation will eventually head to levels in line with our inflation aim, but we also know that a very substantial degree of monetary accommodation is still needed for the upward inflation path to materialize," the ECB chief said.

He stressed that the recent volatility in the euro exchange rate was a source of uncertainty that requires monitoring with regard to its possible implications for the medium-term outlook for price stability.

"We therefore need to be patient and persistent," Draghi said.

The ECB will decide later this year on a re-calibration of policy measures that maintains the degree of monetary support that the euro area economy still needs, he said.

Early this month, the ECB left its all three interest rates and its massive asset purchases unchanged as it acknowledged that the strengthening euro was a source of concern that led to the downgrade to euro area inflation outlook.

Following the decision, Draghi hinted at the possibility of stimulus review in October, causing the euro to soar.

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