President of the European Central Bank (ECB), Mario Draghi , warned today of “loss impulse “of economic recovery in the euro area and insisted that the monetary policies of the institution will not take effect not accompanied by the necessary structural reforms.
” As regards the economic recovery in the euro area, we lose momentum, “Draghi said in its regular appearance before the Committee on Economic and Monetary Affairs of the European Parliament.
ECB president added that” after certain expansion in recent quarters , growth in the euro zone and real GDP came to a standstill in the second quarter. “
The economic conditions that are seen throughout this summer have been “a bit weaker than expected,” Draghi said, adding that although industrial demand for production and manufacturing in July gave “some reason for optimism,” recent indicators “indicate that there is still said one sharp decline “registered in August,” but then you stopped. “
also He referred to a ” unemployment rate too high “ and” growth weak credit “, which which in his opinion is a “brake recovery” of the countries in the single currency.
“The risks around this expected expansion are lower risks,” and further noted that geopolitical tensions could “slow down consumer confidence and business activities.”
As regards the inflation in the euro zone , said he has been “down for a considerable period of time. “
” In August, inflation had reached 0.3%, with a further revision of 0.4%, “he recalled, while considering inflation “will remain low in the coming months before gradually increase during 2015 and 2016.”
Draghi said that during this period of low inflation, the ECB “is going to monitor the evolution of prices “ and will focus on” the potential impact of lower growth dynamics. “
ECB President insisted that the institution” has made a huge effort in recent three years to “ensure price stability,” and that has fought “successful” against the crisis of confidence in the euro, the euro has provided the banking system with a “unprecedented funding” and has continued lowering rates.
Given the “gloomy prospect” of inflation, slowing growth and a moderate monetary and credit dynamics, the ECB decided in early September to lower interest rates to their time low, so that the main type of financing stood at 0.05%, the deposit rate at 0.20%.
also said the ECB will begin to acquire “transparent” program by purchasing asset backed securities (ABS). “Our monetary policy will remain accommodative for quite some time,” he said.
To combat titles inflation said they are willing to “use unconventional instruments and unconventional change our interventions,” although “much depends on situations beyond our scope.” In his opinion, unemployment “has an important role to keep inflation low.”
In any case, Draghi stressed the need for “structural reforms complement with ECB policy and give more power to monetary policy, “and considered that” no tax or monetary stimulus can have a significant effect “without these reforms.
Draghi said that” the crisis only will terminate when you return the full confidence of the real economy and companies return to take risks. “
He said” it seems that the perceived risk on bank loans has been decreasing in the last year or year and a half. “
” When we make decisions on monetary policy I think European citizens (…) In the growth in employment and in the unemployment problem. there is no place for Wall Street or “London, City said in reference to the major financial markets of the world.
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