European Central Bank President Mario Draghi said Tuesday that the ECB has sufficient tools to deliver its price stability mandate of just below two percent.
Speaking during an armchair discussion at the ECB’s Forum on Central Banking in Sintra, Portugal, Draghi reiterated that policymakers are aware of risks low inflation over a longer period.
“Yes, we are confident we can deliver the close to but below two percent objective,” Draghi said. “In terms of instruments, yes, I am confident that we can deliver this.”
Draghi reminded that the central bank had a medium-term price stability objective and that this horizon was not fixed.
“The medium term is also something that depends on the nature of the shock. It is not a fixed concept,” he said.
Draghi also stressed that the ECB is symmetric in its policy response and had in the past tolerated periods of inflation overshooting target.
The ECB reiterated the Governing Council is “very aware of the risks of a too prolonged low inflation risks no matter whether it is caused by external factor or relative price adjustment.”
“But we do not see deflation,” Draghi asserted.
In his opening remarkets to this conference on Monday, Draghi said that the ECB is “not resigned to allowing inflation to remain too low for too long” amid risks “that disinflationary expectations take hold.”
Commenting on the outcome of European parliament elections which saw record support for anti-EU parties, Draghi said this is a signs that policymakers had to “think harder” about how to deliver on jobs and growth.”
However, on the positive side, Draghi noted that “the European parliament coming out of this looks capable of playing a construction role.”