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ECB’s Draghi Says Economic Outlook Has Become More Uncertain

May 03, 2012

European Central Bank President Mario Draghi comments on monetary policy and the region’s debt crisis.

He made the remarks at a press conference in Barcelona today after the ECB kept its benchmark interest rate at a record low of 1 percent.

On the economic outlook:

“Inflation rates are likely to stay above 2 percent in 2012. However, over the policy-relevant horizon, we expect price developments to remain in line with price stability. Consistent with this picture, the underlying pace of monetary expansion remains subdued. Available indicators for the first quarter remain consistent with a stabilization in economic activity at a low level. Latest survey indicators for the euro area highlight prevailing uncertainty. Looking ahead, economic activity is expected to recover gradually over the course of the year. At the same time, as we said previously, the economic outlook continues to be subject to downside risks.”

“Latest signals from euro-area survey data highlight prevailing uncertainty. At the same time, there are indications that the global recovery is proceeding. Looking beyond the short term, we continue to expect the euro-area economy to recover gradually in the course of the year, supported by foreign demand, the very low short-term interest rates in the euro area, and all the measures taken to foster the proper functioning of the euro-area economy. However, remaining tensions in some euro- area sovereign debt markets and their impact on credit conditions, as well as the process of balance-sheet adjustment in the financial and non-financial sectors and high unemployment, are expected to continue to dampen the underlying growth momentum.”

“This economic outlook continues to be subject to downside risks, relating in particular to an intensification of tensions in euro area debt markets and their potential spillover to the euro area real economy, as well as to further increases in commodity prices.”

On monetary policy:

“Inflation expectations for the euro area economy continue to be firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2 percent over the medium term. Over the last few months we have implemented both standard and non-standard monetary policy measures. This combination of measures has helped both the financial environment and the transmission of our monetary policy. Further developments will be closely monitored, keeping in mind that all our non-standard monetary policy measures are temporary in nature and that we maintain our full capacity to ensure medium-term price stability by acting in a firm and timely manner.”

On inflation:

To contact the reporters on this story: Jana Randow in Frankfurt at; Joseph de Weck in Frankfurt at

To contact the editor responsible for this story: Craig Stirling at

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