You are here
Draghi says ECB sticking to QE phase-out despite slowing growth
[FRANKFURT] Mario Draghi said the euro-area economic expansion is still solid enough to cope with global risks, even with new European Central Bank forecasts showing that growth will cool slightly faster than previously predicted.
"Despite some moderation following a strong 2017, the latest indicators overall confirm ongoing broad-based growth," the ECB president told reporters in Frankfurt after the Governing Council confirmed it will slow asset purchases next month and anticipates phasing them out by year-end. "At the same time uncertainties related to rising protectionism, volatility in emerging markets, and volatility in financial markets have gained more prominence."
Mr Draghi spoke within hours of the Turkish central bank's decision to raise interest rates by the most since Recep Tayyip Ergodan came to power, the latest twist in an emerging-market turmoil that has combined with US protectionism and Brexit to complicate the global environment. While the ECB's growth outlook was cut for this year and 2019, the downgrade is slight and the inflation outlook is unchanged from the previous round of projections.
Mr Draghi said the risks to growth are still "broadly balanced," sticking to language the Governing Council has used for more than a year. Bloomberg reported this week that the monetary committee compiling the new economic forecasts sees the risks as now tilted to the downside. The Governing Council has the right to make its own assessment.
"We are confident that our present monetary policy stance is consistent with our aim," Mr Draghi said, adding that "significant monetary policy stimulus is still needed to support the further build-up of domestic price pressures and headline inflation developments over the medium term."
One potential overseas threat to the euro-zone economy took a surprise turn on Thursday. Turkey's central bank raised its benchmark interest rate by 625 basis points to 24 per cent. In doing so, it rebuffed his call for lower borrowing costs made just two hours before the decision was announced.
In the UK, the Bank of England upgraded its view of the economy but reiterated that uncertainty about Britain's future after it leaves the European Union has increased.