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Speech by the President of the ECB, Mario Draghi, Sintra, Portugal

The President of the European Central Bank, Mario Draghi, arrives for the European Council summit in Brussels, Belgium, on 22 March 2019.


The President of the European Central Bank (ECB), Mario Draghi, defended the tools made available to the organization on Tuesday, saying that it could again reduce rates purchases of assets if inflation does not reach its target.

Speaking at the ECB forum in Sintra, Portugal, Draghi tried to reassure market participants about the bank's ability to respond to growing doubts about the real effect of the policy. if a new recession materialized.

"The (European) Treaty requires that our actions are both necessary and proportionate to fulfill our mandate and reach our goal, which means that the limits we set on our tools are specific to the hazards we face. has shown something is that we will use all the flexibility of our mandate to fulfill our mandate – and we will do it again to meet all the challenges of price stability in the future ", said Draghi at the hearing.

At the same conference, which began on Monday, various ECB policymakers and observers expressed concern over the bank's toolbox. "I'm pretty sure the ECB alone can not fight the recession … it will need help, it's pretty obvious," Annette Weisbach, former chief economist, told Blanco. from the International Monetary Fund, CNBC, Annette Weisbach.

He explained that the issue was not so much the lack of tools available, but more their real impact on the economy.

Draghi nonetheless said Tuesday the various options available to the ECB:

"We remain able to improve our forward-looking forecast by adjusting its bias and conditionality to account for changes in the inflation adjustment path." This applies to all instruments of our monetary policy, "he said.

"Further reductions in key interest rates and mitigation measures to limit side effects are still part of our tools." And the asset purchase program (APP) has still a considerable margin, "he added.

The ECB revised its interest rate forecast earlier this month, adding that it was unlikely that its post-crisis rate hike would occur before the middle of 2020. The hawkish stance showed that the central bank doubted the economic recovery in the 19-member region.

The ECB also presented new economic forecasts earlier this month, with lower growth and inflation forecasts for 2020, but slightly higher for this year.

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