FRANKFURT (Reuters) – Following are comments by European Central Bank President Mario Draghi at a news conference after the bank cut its benchmark interest rate by a quarter point to 0.75 percent on Thursday to shore up the euro zone economy, which is on the brink of recession.
The bank also cut the interest rate on its deposit facility to 0.0 percent, effectively encouraging banks to lend their funds in the market to other banks overnight, where they receive a higher interest rate, currently about 0.3 percent.
INFLATION TO FALL BELOW 2 PCT
"(INFLATION WILL FALL BELOW 2 PCT) in 2013 – and perhaps even before then. But don’t ask me exactly the date and the day and the time when this will happen."
ASKED IF SITUATION IS AS BAD AS IN 2008
"Definitely not. We are not there at all."
ASKED IF RATE DECISION WAS UNANIMOUS
"The decision was unanimous on all grounds."
NO SIGN OF INFLATION
"(Deflation) means (a price fall) has to be generalized to countries and across products and sectors; and we see no sign of this in any country."
WHOLE EURO AREA WEAKENING
"We see now a weakening basically of growth in the whole of the euro area, including the country or the countries that had not experienced that before."
ASKED IF COORDINATED WITH OTHER CENTRAL BANKS ON RATE CUT
"The wasn’t any coordination that went beyond the normal exchange of views on the state of the business cycle … economy … or global demand."
LTROS EFFECT TO TAKE TIME, CREDIT FLOWS REMAIN WEAK
"The size and the complexity of these two LTROs is such that we cannot expect to see immediate action, and especially as far as the transmission of the LTROs into higher credit flows. But certainly now a few months have passed, and we see that credit flows are actually weak and remain weak."
GROWTH STILL WEAK
"Economic growth continues to remain weak with heightened uncertainty weighing on confidence."
"The risks surrounding the economic outlook for the euro area continue to be on the downside."
"Beyond the short term, we expect the euro area economy to recover gradually, although with momentum dampened by a number of factors. In particular, tensions in some euro area sovereign debt markets and their impact on credit conditions."
SUBDUED LOAN GROWTH
"To a large extent, subdued loan growth reflects the current cyclical situation, heightened risk aversion, and the ongoing adjustment in the balance sheets of households and enterprises, which weigh on credit demand."
"On the basis of current futures prices for oil, inflation rates should decline further in the course of 2012 and be again below 2% in 2013 … Taking into account today’s decisions, risks to the outlook for price developments continue to be broadly balanced over the medium term."
INFLATIONARY PRESSURE DAMPENED
"Inflationary pressure over the policy-relevant horizon has been dampened further as some of the previously identified downside risks to the euro area growth outlook have materialized."
"All our nonstandard monetary policy measures are temporary in nature, and we maintain our full capacity to ensure medium-term price stability by acting in a firm and timely manner."