ECB President Mario Draghi delivers his speech on “Monetary policy in the euro area” at the ECB Forum on Central Banking today.
He opened by saying that “the euro area’s economy continues on a growth path and inflation is gradually returning towards our objective.” But recent data created “questions about the durability of the growth outlook”. And, the financial crisis presented policy makers with “new issues and fresh challenges in understanding the wage- and price-setting process.” For now, “ample degree of monetary accommodation” will help lifting inflation towards target. And that will be “maintained even after a gradual winding-down of our net asset purchases.” Draghi emphasized that “this requires monetary policy in the euro area to remain patient, persistent and prudent.”
Draghi reiterated the decisions made last week on ending the asset purchase program in December, reinvesting the principle payments afterwards, and, keep interest rates unchanged through the summer of 2019. He added that “this enhanced forward guidance clearly signals that we will remain patient in determining the timing of the first rate rise and will take a gradual approach to adjusting policy thereafter.
