The following are highlights of a speech by European Central Bank President Mario Draghi at a news conference after the bank kept its benchmark interest rate at 1 percent on Thursday.
THREE-YEAR OPS HELPED AVOID CREDIT CRUNCH
“Certainly prevented what could have been a major funding constraint for our banking system with all the negative consequence that this could have been on the credit side. We also saw interest rates declining, I would say, substantially, if not dramatically, all along the yield curve.”
“The more time passes since we had the first three-year LTRO, the more we see signs that it has been an effective policy measure … Since then, we also saw that some unsecured bond markets have reopened. They were completely shut.”
NO BIG CURTAILMENT OF CREDIT
“Despite the moderation in loan growth, the figures on lending do not so far suggest for the whole of the euro area that the heightened financial market tensions led to a sizable curtailment of credit in euro area as a whole in the period to November.”
BANKS NOT HOARDING CASH WITH ECB
“By and large, the banks that have borrowed the money from the ECB are not the same (as those) that are redepositing the money with the deposit facility of the ECB.”
BOND-BUYING PROGRAMME
“The main rationale for having the SMP is the unclogging of the monetary policy transmission channels. We still see that … the interbank market is still not functioning … It was rather comforting to see that some opening of the unsecured bond market is actually taking place. But I mean we really are at the beginning of this process.”
INFLATION TO FALL BELOW 2 PCT AFTER SEVERAL MONTHS
“The information that has become available since early December broadly confirms our previous assessment. Inflation is likely to stay above 2 percent for several months to come before declining to below 2 percent.”
RATE DECISION UNANIMOUS
“The decision and the whole discussion was unanimous.”
ASKED IF ECB COULD CUT RATES NEXT MONTH
“In this situation of high uncertainty, we really look at all factors. We monitor all the developments and then we will decide.”
GRADUAL ECONOMIC RECOVERY
“We continue to expect euro area economic activity to recover, albeit very gradually in the course of 2012, supported by developments in global demand, very low short-term interest rates, and all the measures that we have taken to support the functioning of the financial sector.”
SOME SIGNS OF STABILISATION BUT DOWNSIDE RISK
“Ongoing financial market tensions continue to dampen economic activity in the euro area, while, according to some recent survey indicators, there are tentative signs of stabilization activity at low levels. The economic outlook remains subject to high uncertainty and substantial downside risk.”
URGES EARLY SIGNING OF FISCAL COMPACT
“It will be highly welcome if this fiscal compact could be signed at the end of this month rather than waiting for March.”
“(We welcome) the European Council’s agreement to move to a stronger economic union … The new fiscal compact comprising a fundamental restatement of the fiscal rules, together with the fiscal commitments the euro area governments have made, is an important contribution to ensuring the long-run sustainability of public finances in the euro area countries. The wording of such rules needs to be unambiguous and effective.”
PRICE STABILITY
“Wage cost and price pressures in the euro area should remain modest and inflation rates should develop in line with price stability over the policy-relevant horizon.”
PRICE RISKS BROADLY BALANCED
“The Governing Council continues to view the risks through the medium-term outlook for price developments as broadly balanced.”
GREEK FISCAL ACTION
“Greece has to bring back its fiscal action on track, that has to complete the structural reforms and has to basically move forward on the fiscal consolidation front.”
GREEK PSI
“Concerning the involvement of the private sector in financial assistance for indebted countries, we welcome the reaffirmation that the decisions taken on July 21 and Oct. 26 and 27, 2011 concerning Greek debt are unique and exceptional.”
VERY CONCERNED ABOUT HUNGARY
“On Hungary, I have to say that we are really very concerned … the ECB is really very careful about signs of pressure being put on decision-making bodies.”
“I think these pressures are inconsistent with the spirit of the (European Union) treaty.”
FISCAL POLICY
“Euro area governments need to do their utmost to support fiscal sustainability by correcting excessive deficits in accordance with the agreed timetables and by moving to a structural balanced budget or surplus position over the medium term. Slippages in the implementation of fiscal consolidation plans of vulnerable countries must be corrected swiftly by structural fiscal improvements.”
DAMPENED DOMESTIC DEMAND
“Domestic demand is likely to be dampened by the ongoing tensions in the euro area sovereign debt markets, as well as the process of balance sheet adjustment in the financial and non-financial sectors.”
NON-STANDARD MEASURES
“We are actively working towards the implementation of all the measures announced at our December meeting, which should provide additional support to the economy … all the non-standard monetary policy measures are temporary in nature.”
LIQUIDITY PROVISIONS TO CONTINUE TO SUPPORT BANKS
“The provision of liquidity and the allotment modes for refinancing operations will continue to support euro area banks and thus the financing of the real economy. The extensive recourse to the first three-year refinancing operation indicates that our non-standard policy measures are providing a substantial contribution to improving the funding situation of the banks, thereby supporting financing conditions and confidence.”
By clicking “Continue”, you agree to the default cookie settings on our website.
Trading Point uses cookies to ensure that we provide you with the best experience while visiting our website. Some of the cookies are needed to provide essential features, such as login sessions, and cannot be disabled. Other cookies help us improve our website’s performance and your experience through personalising content, providing social media features and analysing our traffic. Such cookies may also include third-party cookies, which might track your use of our website. You may change your cookie settings at any time.
Read more, or change your cookie settings.
What are Cookies?
Cookies are small data files. When you visit a website, the website sends the cookie to your computer. Your computer stores it in a file located inside your web browser.
Cookies do not transfer viruses or malware to your computer. Because the data in a cookie does not change when it travels back and forth, it has no way to affect how your computer runs, but they act more like logs (i.e. they record user activity and remember stateful information) and they get updated every time you visit a website.
We may obtain information about you by accessing cookies, sent by our website. Different types of cookies keep track of different activities. For example, session cookies are used only when a person is actively navigating a website. Once you leave the website, the session cookie disappears.
Why are cookies useful?
We use functional cookies to analyse how visitors use our website, as well as track and improve our website’s performance and function. This allows us to provide a high-quality customer experience by quickly identifying and fixing any issues that may arise. For example, we might use cookies to keep track of which website pages are most popular and which method of linking between website pages is most effective. The latter also helps us to track if you were referred to us by another website and improve our future advertising campaigns.
Another use of cookies is to store your log in sessions, meaning that when you log in to the Members Area to deposit funds, a "session cookie" is set so that the website remembers that you have already logged in. If the website did not set this cookie, you will be asked for your login and password on each new page as you progress through the funding process.
In addition, functional cookies, for example, are used to allow us to remember your preferences and identify you as a user, ensure your information is secure and operate more reliably and efficiently. For example, cookies save you the trouble of typing in your username every time you access our trading platform, and recall your preferences, such as which language you wish to see when you log in.
Here is an overview of some of the functions our cookies provide us with:
This website uses Google Analytics, a web analytics service provided by Google, Inc. ("Google"). Google Analytics uses analytical cookies placed on your computer, to help the website analyze a user's use of the website. The information generated by the cookie about your use of the website (including your IP address) may be transmitted to and stored by Google on their servers. Google may use this information to evaluate your use of the website, to compile reports on website activity and to provide other services related to website activity and internet usage. Google may also transfer this information to third parties, where required to do so by law, or where such third parties process the information on behalf of Google. Google will not associate your IP address with any other data held. By using this website, you give your consent to Google to process data about you in the manner and for the purposes set out above.
Change Settings
Please select which types of cookies you want to be stored on your device.
We are using cookies to give you the best experience on our website.
Read more or change your cookie settings.