–Inflation Expectations Firmly Anchored In Medium Term
–ECB Will Monitor With ‘Extreme Attention’ Any Oil Pass-Through
FRANKFURT (MNI) – European Central Bank President Mario Draghi said
Wednesday it was too soon to talk about an exit strategy from the ECB’s
extraordinary liquidity measures.
“Any exit strategy talk for time being is premature,” Draghi told a
press conference following bank’s decision to leave its key interest
rates unchanged.
Draghi said the central bank was not confronted with any immediate
inflationary pressures and inflation expectations were “anchored over
the medium term.” He did note price pressure from oil, indirect tax
hikes and commodities.
Observing that inflation in March had slowed to 2.6% from 2.7% in
February, he reiterated ECB projections that inflation will be above 2%
this year and decline below 2% next year.
Any “pass-through” from higher oil or other commodity prices into
second-round effects on inflation will be monitored with “extreme
attention,” and the ECB will respond in a “timely and speedy fashion,”
he said.
Draghi said that the ECB needed “first and foremost an assessment
of the impact that the two LTROs have had on the banking system and more
generally on the financial system.”
The central bank’s analysis so far has not taken account of the
second LTRO, which was only settled on March 1, he reminded. LTROs are
“powerful and complex measures that have affected balance sheets of
banks in a variety of ways,” and further study of their impact is
needed, he said.
“We know these two measures have avoided a major credit crunch and
relieved funding pressure on the banks,” he said.
–Paris newsroom, Tel: +331 4271 5540; email: jduffy@marketnews.com
–London Bureau; Tel: +44 207 8627492; email: ukeditorial@marketnews.com
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