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EghtesadOnline: European Central Bank President Mario Draghi Thursday announced the institution’s monetary policy would remain unchanged and asked for more patience as the economic recovery continues.

Draghi told a Frankfurt press conference that the ECB’s governing council would maintain interest rates as they are and insisted that the bank is satisfied with progress so far, EurActiv reported.

He also confirmed that the council would continue to make purchases at the current rate under its Asset Purchase Program until March. The ECB said that this would then continue until December, and beyond if needed.

Under the APP, the Frankfurt institution will continue to buy public and private debt at a rate of €80 billion ($85.1 billion) a month. After March, this will be scaled down to €60 billion, Financial Tribune reported.

Draghi also confirmed that the ECB would be willing to extend or even increase the size of the program if the financial outlook worsens or conditions become unfavorable.

“Recovery of all of the eurozone is in the interest of everybody, including Germany,” Draghi said. “We have to be patient. As (the) recovery will firm up, real rates will go up.”

Critics in Berlin argue that thrifty Germans face negative returns on their savings while highly indebted and inefficient governments borrow money for next to nothing, raising concern that German voters will turn on the establishment and flock to populist parties.

  Inflation Trends

Italian President Sergio Mattarella also insisted that inflation rises must be consistent and durable, and not just temporary, warning that “there are no signs yet of a convincing upward trend in underlying inflation”.

He said the eurozone’s annual rate of inflation hit 1.1% in December but warned that its increase from 0.6% in November was largely down to energy prices. The ECB has a stated target of stabilizing inflation at just below 2%.

Core inflation, which discounts volatile factors like food and energy prices, still topped 0.9% in December though.

Draghi took steps to differentiate between inflation rate and price pressures in order to placate German observers that are calling for a quicker end to the bank’s monetary stimulus, claimed UniCredit’s eurozone chief economist Marco Valli.

Commerzbank chief economist Jorg Kramer said that “Draghi downplayed the increase in inflation rate and improving economic figures” in the eurozone.

“Its purpose was to avoid giving the impression that the ECB is plotting a way out of its ultra-generous monetary policy,” he added.

In Germany, where inflation hit 1.7% in November, warnings have been made about price increases.

Kramer criticized that the ECB’s liquidity had largely been focused on the financial and property markets, and that the real economy is only now starting to feel the benefit.

He did acknowledge though that the monetary policy’s transmission channels are less blocked than last year and that growth is higher than expected.

Draghi said that the governing council had been unanimous in agreeing that the decisions taken in December were the right course of action and that monetary policy that has been in place since June 2014 has been satisfactory.


Draghi cited several indicators and figures, including eurozone growth of between 0.3% and 0.6% each quarter since 2015, as well as the creation of over four million jobs over the last three years.

Consumer confidence is also at its highest since April 2015 and industrial activity is at levels not seen since May 2011. Economic recovery remains strong and on track, with inflation mostly driven by energy prices.

But Draghi, speaking on the eve of Donald Trump’s inauguration as US president, also added that economic risks posed by “the uncertain global situation” also remain.

With elections also due in France, the Netherlands and possibly Italy, the ECB will be keen to chart a steady course and avoid any more political ripples until new governments are in place.

ECB European Central Bank Mario Draghi EU monetary policy