We need to be patient and persistent, ECB's Draghi says
The head of the European Central Bank appeared to dampen speculation regarding the prospects for tapering its quantitative asset purchase programme somewhat at the start of the week.
In remarks prepared for a speech to the European Parliament's economic committee, ECB chief Mario Draghi said downside risks continued to exist, mainly relating to global factors and developments in foreign exchange markets.
"The firm economic recovery still needs to translate more convincingly into stronger inflation dynamics. As I reported already in the past, deflation risks have essentially disappeared. Nevertheless, measures of underlying inflation have picked up only moderately over recent months," he added.
"Overall, we are becoming more confident that inflation will eventually head to levels in line with our inflation aim, but we also know that a very substantial degree of monetary accommodation is still needed for the upward inflation path to materialise."
Indeed, according to Draghi rate-setters in Frankfurt still spied some uncertainties with regards to the medium-term outlook, while specifically singling out volatility in the exchange rate.
"Most notably, the recent volatility in the exchange rate represents a source of uncertainty which requires monitoring with regard to its possible implications for the medium-term outlook for price stability," he added.
"We therefore need to be patient and persistent. An upward adjustment of headline inflation that is durable and self-sustained requires a further absorption of economic slack. This, in turn, still requires a very ample degree of monetary policy accommodation."