FRANKFURT (MNI) – The European Central Bank faces a key challenge
phasing out its “still very accommodative policy” and must act in a
“preemptive manner” to avoid inflation expectations from becoming
unanchored, European Central Bank Governing Council member Mario Draghi
said Wednesday in a European Parliament hearing on his candidacy to
become the next ECB President.
“An important challenge of the ECB is to manage the exit from the
still accommodative monetary policy stance,” Draghi told the
Parliament’s Economic and Monetary Affairs Committee. Rates must be
adjusted in a preemptive manner to avoid any deterioration of inflation
expectations, he added.
Draghi also said that non-standard measures “need to be phased out
to the extent that they are no longer needed for the transmission of
monetary policy.”
The likely successor to President Jean-Claude Trichet assessed that
“the euro has been a great success” and none of the recent events “have
called this success into question.” Draghi added that the “euro is a
credible currency” and the ECB has been successful in ensuring price
stability.
–Frankfurt newsroom, +49-69-720-142; jtreeck@marketnews.com
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