–Adds Comments On Italy, ECB Liquidity Policy, Price Stability
PARIS (MNI) – Eurozone economic activity is “very moderate,”
dampened by slowing world demand, a drop in consumer and business
confidence, as well as the sovereign debt crisis, European Central Bank
Governing Council member Mario Draghi said Wednesday.
Draghi, who will become the new ECB president next week, warned
that the growth picture in the single currency has darkened. “The risks
of a weakening of growth prospects are significant, in the context of
strong uncertainty,” he said in the text of a speech for delivery at the
annual “Savings Day” conference in Rome.
With respect to Italy, whose central bank he heads for six more
days, Draghi noted that the “particular vulnerability” is the high level
of public debt, as well as “doubts about the growth outlook for our
economy, uncertainty, and delays in correcting imbalances and
implementing measures to relaunch growth.”
He noted that, given these tensions, yields on Italy’s sovereign
10-year bonds had spiked to 5.9% on Tuesday, returning to the “very high
levels” seen in August.
Draghi said that the ECB and national Eurosystem central banks were
“determined, with their non-conventional measures, to prevent
malfunctioning in money and financial markets from impeding the
transmission” of monetary policy.
“With the ample provision of funds and the mode of adjudication
[ie, full allotment at fixed rates] in our refinancing operations, we
continue to assure that banks are not constrained with regard to
liquidity,” the soon-to-be ECB president said.
He added that, “all non-conventional measures adopted in response
to the financial tensions are, by their nature, temporary. It remains
essential to assure price stability, anchoring inflation expectations in
the euro area in line with the objective of maintaining inflation below
but close to 2% over the medium term.”
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–Paris newsroom, +331-42-71-55-40; bwolfson@marketnews.com
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