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Draghi pledges to act if European inflation outlook weakens

Xinhua, September 24, 2015 Adjust font size:

The European Central Bank (ECB) assured the European Parliament (EP) that it would take action if inflation outlook weakens over the mid-term in the European countries, ECB President Mario Draghi Wednesday said on the monetary dialogue meeting.

"ECB will not hesitate to act if some of the downward risks weaken the inflation outlook over the mid-term more fundamentally than we project at present," he said.

Meanwhile, he hinted at the possibility of adjusting the size, composition and duration of the ECB's asset purchase programme, to add monetary policy impetus if necessary.

In this year's third monetary dialogue meeting, Draghi said economic indicators had shown signs of resilience over the summer, but that the macroeconomic environment had become more challenging.

"Our September macroeconomic projections indicated a weaker economic recovery and a slower increase in inflation rates than we had expected earlier this year," he said, suggesting that the key causes were slowing growth in emerging economies, a stronger euro and lower oil and commodity prices.

The monetary measures currently in place continue to have a favourable impact on the costs and availability of credit for firms and households, said Draghi, noting that they had boosted household demand for consumer durables and stimulated investment, particularly by small- and medium-sized companies.

The European Parliament has been criticizing the ECB for still being part of the troika over the Greek debt issue and has been calling the ECB to end this.

Draghi argued that the Bank complies with existing legislation, but he said "the ECB will not be in the troika forever".

However, ECB have decided it would no longer accept Greek government bonds as collateral.

"For that we need to be assured that Greece complies with the assistance programme, throughout different governments and that it implements structural reform and fiscal policy commitments," he explained.

"The next step would then be to assess if the debt is sustainable and on this the Governing Board has serious concerns," he said. Endit