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12 November 2015

ECB ready to do more if inflation outlook weakens, Draghi tells MEPs

The EU economy is showing resilience in the face of external circumstances, but the European Central Bank’s March inflation forecast was too positive, ECB President Mario Draghi admitted during the regular Economic and Monetary Affairs Committee meeting.

This regular “monetary dialogue” meeting with the Economic and Monetary Affairs Committee focused on the Eurozone economic outlook and the ECB's role in macro-economic adjustment programmes.

Ready to do more

The Bank is ready to go the extra mile if the inflation outlook weakens, reiterated Mr Draghi. "If we were to conclude that our medium-term price stability objective is at risk, we would use all the instruments available within our mandate to ensure that an appropriate degree of monetary accommodation is maintained", he said. He also hinted that the Bank's assets purchase programme could be prolonged beyond September 2016, and that "other instruments could also be activated to strengthen the impact of the programme if necessary". The bank will re-examine the need for monetary policy accommodation in December, he added.

"Irish banking crisis was homemade"

[...] Rejecting claims that the ECB had “blackmailed” Ireland, Mr Draghi described its bank crisis as “homemade”. He noted that the Irish government had already taken a series of measures before the ECB stepped in and it was the Irish government that had decided to accept a third package. To illustrate the scale of these bailouts, he pointed out that private investors suffered losses of up to €44 billion even before they began, and that the first bailout had amounted to €4 billion, and the second to €2 billion. [...]

Low interest rates

In the second part of the debate, in which he was asked about low interest rates resulting from the ECB’s monetary policy measures, and replied in his role as chair of the European Systemic Risk Board (ESRB), Mr Draghi said that "too low interest rates for a long time are not good for banks, insurance and pension companies. But having said that, our mandate is not to make these companies profitable, it is to reach our price stability objectives. None of our critics suggest that we should increase interest rates today, but we will monitor any potential risks."

Full press release

© European Parliament

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