Published November 08, 2012
FRANKFURT – The European Central Bank held its main interest rate at 0.75 percent on Thursday, deferring any cut in borrowing costs while it assesses the extent of the euro zone's economic downturn and waits for a cue to use its new bond-purchase programme.
Following are comments by ECB President Mario Draghi at a news conference after the meeting.
AID REQUESTS IN THE HANDS OF GOVTS
"All these signs (from markets and the banking sector) are encouraging and by themselves add up to the equivalent of a further expansion of monetary policy because the financial markets are considerably easier now than they were 2 or 3 months ago.
"On a Spanish request I will decline any comment. It's entirely in the hands of governments.
"The conditions of OMT are clear and we stand ready to act. OMT is as you know a fully effective backstop that is devised to remove the tail risk from the euro area and we do stand ready to act."
ON EUROPEAN BANKING SUPERVISION
"In the context of measures to achieve an integrated financial framework, (the Governing Council) welcomes in particular the objective of agreeing on the legislative framework for single supervisory mechanism with a view to the SSM (Single Supervisory Mechanism) becoming operational in the course of 2013."
EURO ZONE FISCAL CONSOLIDATION BEARING FRUIT
"Visible progress is being made in the correction of unit labor costs. However, further measures to enhance labor market flexibility and mobility ... are warranted.
"As regards fiscal policies, there is clear evidence that consolidation efforts in euro area countries are bearing fruit. It is crucial that efforts are maintained to restore sound fiscal positions.
"Full compliance with the enforced EU fiscal and governance framework including the rapid implementation of the fiscal compact would send a strong signal to markets and strengthen confidence in the soundness of public finances."
"We always discuss all instruments of monetary policy, but the Governing Council decided ... to keep interest rates unchanged. We have not discussed what we are going to do next year."
INFLATION TO STAY ABOVE 2 PCT
"Owing to high energy prices and increases in indirect taxes in some euro area countries, inflation is likely to remain above 2 percent for the remainder of 2012.
"They are expected to fall below that level in the course of next year and to remain in line with price stability over the policy horizon.
"The underlying pace of monetary expansion continues to be subdued.
"Inflation expectations for the euro area remain firmly anchored in line with our aim of maintaining inflation rates below but close to 2 percent over the medium term."
READY TO START OMTs
"We are ready to undertake OMTs which will help to avoid extreme scenarios, thereby clearly reducing concerns about the materialization of destructive forces."
EURO ZONE ECONOMY TO REMAIN WEAK
"Economic activity in the euro area is expected to remain weak although it continues to be supported by our monetary policy stance and financial market confidence has visibly improved on the back of our decisions as regards Outright Monetary Transactions." (London Desk +44 207 542 4441)