FRANKFURT, Germany — Mario Draghi said record monetary stimulus is filtering through to the economy on schedule and insisted that the European Central Bank needs to see its bond-buying plan through to the finish.
“The asset-purchase programs are proceeding well,” the ECB president said at a news conference in Frankfurt on Wednesday after officials kept interest rates on hold and he unveiled new forecasts projecting a pickup in growth and inflation in the next three years. “Reaching our objectives is conditional on the full implementation of our monetary-policy stance.”
Since the ECB started its $1.2 trillion quantitative-easing program three months ago, the inflation rate in the 19-nation euro area has turned positive, although it remains far short of the ECB’s goal of just below 2 percent.
The improving economic performance comes despite uncertainty created by international creditor talks on Greece as the country flirts with default. Greek Prime Minister Alexis Tsipras will meet with European Commission President Jean-Claude Juncker in Brussels on Wednesday evening.
“There should be a strong agreement — one that produces growth,” Draghi said, while declining to give details on current negotiations over the country’s bailout package.
ECB policy makers expect the recovery to broaden, and “domestic demand should be further supported by our monetary-policy measures,” Draghi said. “The recovery is on track exactly according to our projections.”
Government debt extended a global slump after Draghi said markets must get used to periods of higher volatility. The German 10-year bond yield rose to the highest this year at 0.887 percent.
Presenting the latest round of forecasts, Draghi said the outlook remains basically unchanged compared with the March prognosis. Inflation will be 0.3 percent this year instead of zero, as previously predicted, and will reach 1.8 percent in 2017. Growth in 2015 is expected to average 1.5 percent, then 1.9 percent in 2016, before a 2 percent pace the year after.
“We had expected figures stronger than our projections,” he said. “There has been some loss of momentum, mostly due to the weakening of economies outside the euro area.”
