Key quotes from ECB head Draghi’s press briefing
FRANKFURT, Germany (AP) — At his monthly news conference following the European Central Bank’s policy-setting meeting, President Mario Draghi on Thursday answered questions from reporters.
Here are some highlights of the things he said:
— INTEREST RATES
The ECB kept its key refinancing rate at the record low of 0.5 percent on Thursday and reiterated its “forward guidance,” an indication on where it expects interest rates to be in coming months.
“The Governing Council confirms that it expects the key ECB interest rates to remain at present or lower levels for an extended period of time.”
— MARKET REACTION
Interest rates in the open market have declined since the ECB first issued that forward guidance last month. Draghi suggested the rates were still not as low as they should be considering how weak the economy is and the ECB’s expectations for where official interest rates would be in coming months.
“Current expectations of rate hikes in money markets are according to our assessment unwarranted.”
— FUTURE RATE CUTS
Draghi left open the door to more cuts to the key interest rate. Other major central banks like the Federal Reserve and the Bank of Japan have cut their key rates to or near zero percent.
“We haven’t reached the zero bound.”
— EASING OF THE CRISIS
Since the ECB unveiled in September last year a bond-buying program meant to keep governments’ bond market borrowing rates down, financial markets in the eurozone have improved dramatically. Borrowing rates have dropped significantly in crisis-hit countries like Italy, Spain, Portugal, Ireland and Greece.
Draghi said that was not all merit of the ECB, however, and pointed to the vast amount of reforms governments have made.
“I thank you so much but we shouldn’t exaggerate this. Much of this was due to the governments’ action.”
The ECB is tasked with keeping the consumer price inflation rate at or near 2 percent. It was 1.6 percent in July, unchanged from June. Draghi said inflation was likely to remain subdued.
“Underlying price pressures are expected to remain subdued, reflecting the broad-based weakness in aggregate demand and the modest pace of the recovery.”