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Draghi comments at ECB news conference
March 7, 2013 / 2:56 PM / 5 years ago

Draghi comments at ECB news conference

FRANKFURT (Reuters) - The European Central Bank kept interest rates steady at a policy meeting on Thursday. Following are comments by ECB President Mario Draghi at a news conference after the meeting.

Mario Draghi, President of the European Central Bank (ECB) , addresses the media during his monthly news conference in Frankfurt, March 7, 2013. Draghi announced that the ECB leaves the interest rates unchangendREUTERS/Kai Pfaffenbach

ON ITALY‘S ELECTIONS

”Markets after some excitement immediately after the elections have now reverted back, more or less, to what they were before ...

“Markets understand that we live in democracies.”

”We have many signs that confidence to financial markets of the euro area is returning.

“If we look at contagion, you have seen certainly that the contagion to other countries has been muted this time, contrary to what might’ve happened about a year and a half ago. And this is another positive sign.”

ASKED ABOUT POSSIBLE RATE CUT

“We have discussed the possibility of doing it. So there was discussion. The prevailing consensus was to leave the rates unchanged.”

“The (economic) recovery path is by and large unchanged and the inflation projection in line with our medium-term policy objectives.”

CREDIT FRAGMENTATION

“What I can say is that fragmentation ... has been now for quite a while - although, as I said, it’s receding - an obstacle to our monetary policy. But having said that .... it’s the outcome of many, many factors, most of which the ECB can do very little about.”

NEGATIVE DEPOSIT RATES

”We looked at that and we don’t commit to do anything. The unintended consequences of a measure like that can be serious, as has been shown in other... similar experiences.

I think in the past I have used the words uncharted waters if we are to get into that mode.”

ASKED IF OMT WOULD HELP IRELAND OUT OF BAILOUT

“You know the rules of OMT. You know that OMT cannot be used to enhance the return to the market. But in principle, there are rules that are there and countries that comply with these rules are eligible.”

IRISH CONSOLIDATION EFFORTS

“The Irish government has undertaken a very, very significant progress and very significant results on several fronts, and I never tire of saying so. Further action is needed especially on the banking side, on the financial sector front ... It is not time to rest. It is not time to be complacent, but continue the effort with the same effectiveness that has characterized the action of the Irish government in the past.”

ON CYPRUS

“It is very important that the Cypriot government takes this opportunity to revisit the anti-money laundering legislation; not so much in terms of the legislation, but actually accepting international oversight on how effectively this legislation has been implemented.”

CRITERIA FOR OMT ACCESS

“Countries should be in the market by themselves ... being able to issue (debt) along the yield curve ... to a fairly broad category of investors ... (in) certain quantities.”

“The OMT has never been meant to help return countries to the market.”

NOTHING SPECIAL PLANNED TO AID SMEs

“No, we are not at this point in time ... committing or planning anything special,” Draghi said when asked about possible moves to boost lending to SMEs, including potential changes to collateral rules.

“The large companies, by and large, have no problem in financing and funding themselves; SMEs do.”

ECB‘S ROLE IN TROIKA

“The troika functions very well ... The troika has to look at the whole of Europe, and we believe that the ECB has some value-added and some specific competence in the sector of its competence, namely the financial sector.”

MIXED DATA PICTURE

“We are actually seeing a dichotomy between the hard data, which as you said a moment ago are on average disappointing, and a broad indicator of soft data, of survey data, of sentiment data, which almost uniformly are positive.”

BOND BUYING PLAN REMAINS IN PLACE

“On OMT, I mean the rules of OMT are what they are. So we will see, and it is not in our capacity. The ball is entirely with the governments; I have seen this on and on and on. OMT remains, is in place. It is a very effective backstop, and it is there. But you know the rules.”

PRICE RISKS

”Risks to the outlook for price developments continue to be seen as broadly balanced over the medium term.

“Underlying price pressures should remain contained, given the environment of weak economic activity in the euro area.”

DOWNSIDE ECONOMIC RISKS

”The Governing Council continues to see downside risks surrounding the economic outlook for the euro area.

“A gradual (economic) recovery should commence in the second part (of 2013).”

FULL ALLOTMENT OF LIQUIDITY

“Our monetary policy stance will remain accommodative with the full allotment mode of liquidity provision.”

CLOSELY MONITORING MONEY MARKETS

“We are closely monitoring conditions in the money markets, and their potential impact on the stance of monetary policy and the functioning of our transmission of our monetary policy to the economy.”

LTRO REPAYMENTS

“These repayments reflect improvements in financial market confidence over the last few months and receding financial market fragmentation.”

GRADUAL RECOVERY

“Necessary balance sheet adjustments in the public and private sectors will continue to weigh on economic activity. Later in 2013, economic activity should gradually recover, supported by a strengthening of global demand and our accommodative monetary policy stance.”

INFLATION

“Inflation expectations for the euro area remain firmly anchored, in line with our aim of maintaining inflation rates below but close to 2 percent over the medium term. Overall, this will allow our monetary policy stance to remain accommodative.”

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