Inflation in EU lacks durability despite economic recovery

The European Central Bank (ECB) President Mario Draghi said here Friday that the growth outlook for the euro area was clearly improving, while the underlying inflation trend remained subdued mainly due to weak wage growth, which indicated the lack of durability of inflation.

Draghi delivered a keynote speech at the 27th Frankfurt European Banking Congress, reiterating the necessity of ample degree of monetary stimulus for raising underlying inflation pressures and supporting headline inflation over the medium term.

"We are not yet at a point where the recovery of inflation can be self-sustained without our accommodative policy," Draghi underlined that the very favourable financing conditions facing firms and households as a key motor of the recovery were still heavily contingent on cheap money provided by the ECB.

The ECB decided three weeks ago to cut the level of bonds it purchases every month from January 2018 on, while extending the duration of the purchase program to September of next year or beyond.

Draghi said the recalibration of asset purchases aimed to signal "our growing confidence in the euro area economy".

With positive growth of 18 straight quarters, the euro area is seen in the midst of a solid economic expansion.

"We have increasing confidence that the recovery is robust and that this momentum will continue going forward," Draghi said.

However, he reminded that the latest monetary policy decisions made by the ECB showed that "we must be patient and persistent for inflation to return sustainably to our objective".

Hosted by Deutsche Bank, Commerzbank, BNP Paribas and Frankfurt Government, the annual Frankfurt European Banking Congress aims at providing a forum for open and forward oriented discussion of European issues, their role in the world of politics and financial markets.

Issues like raising the competitiveness of the European banking sector, impact of degloblalization on Europe, were discussed at this year's congress.