PARIS (Reuters) - The European Central Bank will keep monetary policy loose for as long as it takes to push ultra-low inflation in the euro zone back up closer to the two percent level, its president Mario Draghi said on Wednesday.
With data showing the single currency zone’s economy having ground to a halt in the second quarter, Draghi told French radio the ECB would do all in its power to stimulate growth but reaffirmed that euro zone countries needed to make their economies fitter.
“Monetary policy will remain accommodative for a long time and I can tell you that the (ECB) Governing Council is unanimous in committing itself to using the tools at its disposal to bring inflation back to just under two percent,” Draghi, speaking through an interpreter, told Europe 1 radio.
Referring to signs of growth elsewhere in the world economy, he said ECB policy would remain accommodative even “while other countries’ monetary policy may gradually acknowledge recovery is taking place”.
Draghi has in recent days signaled the bank was ready to use additional unconventional tools to spur inflation and growth. He gave no information of these, but noted: “Interest rates will remain low because they can’t get much lower.”
On the efforts of countries such as France to push through measures to make their economies more competitive, he said: “The risk of doing too little is higher than the risk of doing too much. These reforms have been planned for years - now they must be implemented.”
Consumer inflation in the 18 countries sharing the euro rose 0.1 percent month-on-month in August for a 0.4 percent year-on-year increase, the EU’s statistics office Eurostat said last week, revising upwards its initial estimate, from Aug. 29, of a 0.3 percent annual gain.
Inflation has fallen steadily since the end of 2011, reflecting a weak euro zone economy and near-record unemployment, after a debt crisis nearly ripped the bloc apart. Economic growth came to a standstill in the second quarter and Italy has slipped back into its third recession since 2008.
Draghi said he saw no danger of outright deflation in the euro zone, saying the biggest danger came from unemployment.
Reporting by Mark John, Editing by Brian Love