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The current very substantial degree of monetary accommodation is still needed for domestic price pressures to strengthen and stabilize around levels close to the European Central Bank's inflation goal of 2 percent, European Central Bank President Mario Draghi said Monday.
The euro area economic outlook is improving and downside risks to the growth outlook are diminishing again, Draghi said to the European Parliament's Economic and Monetary Affairs Committee.
Despite firmer recovery, underlying inflation pressures have remained subdued, which warrants the necessity to continue with a fairly substantial amount of monetary accommodation.
"We remain firmly convinced that an extraordinary amount of monetary policy support, including through our forward guidance, is still necessary for the present level of underutilized resources to be re-absorbed and for inflation to return to and durably stabilize around levels close to 2% within a meaningful medium-term horizon," he said.
The Governing Council will receive an update of the staff projection at the June meeting, which will enable it to formulate its judgement on outlook for growth and inflation.
Draghi added that structural reforms are essential to create a business environment that is conducive to innovation, which in turn enhances productivity growth.
