ECB's Draghi says too early to decide on further stimulus

Wed Sep 23, 2015 4:20pm EDT
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By Francesco Guarascio and Balazs Koranyi

BRUSSELS/FRANKFURT (Reuters) - Risks to Europe's inflation and growth outlook have increased due to the emerging market slowdown but the European Central Bank needs more time before deciding on further stimulus, ECB President Mario Draghi said on Wednesday.

Draghi said price growth will take longer than previously expected to rise back to the ECB's near 2 percent target and that the euro zone's central bank is ready to beef up its 1 trillion euro plus asset buying program if needed.

But it needs more evidence to conclude whether China's slowdown, the euro's rise and falling oil prices will divert inflation from its projected path.

Draghi's relatively hawkish comments confounded some market expectations that the ECB was close to expanding its asset buys and sent the euro slightly stronger.

"The asset purchase program has sufficient in-built flexibility," Draghi told the European Parliament's Committee on Economic and Monetary Affairs. "We will adjust its size, composition and duration as appropriate, if more monetary policy impulse should become necessary."

He said more time was needed to determine whether the slowdown in emerging markets is likely to be temporary or permanent and to assess the driving forces behind tumbling commodities prices and recent turbulence in financial markets.

The ECB targets inflation of just under 2 percent but the bank has said inflation could turn negative in the next few months before recovering later in the year.


European Central Bank (ECB) President Mario Draghi testifies before the European Parliament's Economic and Monetary Affairs Committee in Brussels, Belgium, September 23, 2015.   REUTERS/Yves Herman