–Updating with the comments on interest rates, non-standard measures
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 dismissed concerns that rising interest rates could hurt
troubled peripheral countries. “The objective of the ECB is to have
mid-term price stability for the area as a whole,” Draghi said, adding
that ensuring price stability would reduce risk premia everywhere.
Draghi also said that the ECB’s non-standard measures “need to be
phased out to the extent that they are no longer needed for the
transmission of monetary policy.” He reiterated that all non-standard
measures are temporary and will not interfere with the ECB’s prime
mandate of ensuring price stability.
“No sovereign debt crisis or persistent bidder banks could ever
make the ECB [take a] detour from its price stability objective,” Draghi
asserted.
The likely successor to President Jean-Claude Trichet assessed that
“the euro has been a great success” and that 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
[TOPICS: M$$EC$,M$X$$$,M$$CR$,MT$$$$]