The eurozone’s economic prospects are better than at any point over the past seven years but growth is set to remain below pre-crisis levels and credible reforms are still required, the European Central Bank’s president said yesterday.

“Monetary policy is working its way through the economy,” Mario Draghi told an audience of central bankers and academics at an ECB event in Portugal. “Growth is picking up. And inflation expectations have recovered from their trough.”

“This is by no means the end of our challenges, and a cyclical recovery alone does not solve all of Europe’s problems,” he said.

“It does not eliminate the debt overhang that affects parts of the Union. It does not eliminate the high level of structural unemployment that haunts too many countries. And it does not eliminate the need for perfecting the institutional set-up of our monetary union,” he said.