The European Central Bank will keep monetary policy loose for as long as it takes to push ultra-low inflation in the euro zone back up closer to the two percent level, its president Mario Draghi said yesterday.
With data showing the single currency zone’s economy having ground to a halt in the second quarter, Draghi told French radio the ECB would do all in its power to stimulate growth but reaffirmed that eurozone countries needed to make their economies fitter.
“Monetary policy will remain accommodative for a long time and I can tell you that the (ECB) Governing Council is unanimous in committing itself to using the tools at its disposal to bring inflation back to just under two per cent,” Draghi, speaking through an interpreter, told Europe 1 radio.
Referring to signs of growth elsewhere in the world economy, he said ECB policy would remain accommodative even “while other countries’ monetary policy may gradually acknowledge recovery is taking place”.
Interest rates will remain low because they can’t get much lower
Draghi has in recent days signalled the bank was ready to use additional unconventional tools to spur inflation and growth. He gave no information of these, but noted: “Interest rates will remain low because they can’t get much lower.”
On the efforts of countries such as France to push through measures to make their economies more competitive, he said: “The risk of doing too little is higher than the risk of doing too much. These reforms have been planned for years – now they must be implemented.”
Consumer inflation in the 18 countries sharing the euro rose 0.1 per cent month-on-month in August for a 0.4 per cent year-on-year increase, the EU’s statistics office Eurostat said last week, revising upwards its initial estimate, from August 29, of a 0.3 per cent annual gain.
Inflation has fallen steadily since the end of 2011, reflecting a weak eurozone economy and near-record unemployment, after a debt crisis nearly ripped the bloc apart. Economic growth came to a standstill in the second quarter and Italy has slipped back into its third recession since 2008.
Draghi said he saw no danger of outright deflation in the eurozone, saying the biggest danger came from unemployment.