BRUSSELS/FRANKFURT/PARIS (dpa-AFX) - The European Central Bank will end the asset purchase programme only when inflation makes sufficient progress in its path towards the target of 'below, but close to 2 percent' over the medium term, President Mario Draghi said Wednesday.
Although inflation is converging towards the target over the medium term, the central bank requires more evidence, Draghi said at a conference organized by the Institute for Monetary and Financial Stability, in Frankfurt.
'We still need to see further evidence that inflation dynamics are moving in the right direction,' he said. The monetary policy will remain patient, persistent and prudent to guarantee the return of inflation to the target, said Draghi.
Adjustments to monetary policy will remain predictable, and they will proceed at a measured pace, he added.
'There is a very clear condition for us to bring net asset purchases to an end: we need to see a sustained adjustment in the path of inflation towards our aim, which is a headline inflation rate of below, but close to 2 percent over the medium term, ECB chief said.
At the same conference, Executive Board member Peter Praet said the current forward guidance about the policy rates will be less effective over time.
'With the passage of time, the indication that policy rates will remain at their present levels well past the end of net asset purchases will gradually cease to provide sufficient guidance about the likely evolution of the monetary policy stance,' said Praet.
So, the forward guidance on the path of policy rates will have to be further specified and calibrated, he noted.
ECB Vice President Vitor Constancio said the European legal macroprudential policy framework needs to be enhanced. There is no room for complacency and inaction.
Another Executive Board member Benoit Coeure said, in Berlin, that the ECB cannot ignore the risks of fintechs. 'Should regulatory loopholes emerge, we would need to close them to ensure that financial intermediation outside the banking sector remains safe and sound,' he said.
Copyright RTT News/dpa-AFX