WASHINGTON—European Central Bank President Mario Draghi on Thursday offered a firm assurance that the ECB will successfully boost inflation from its ultralow levels, and that it is willing to enact more monetary stimulus if needed.
His comments suggest that, even after significant easing steps in June and September, the ECB is still in stimulus mode, in contrast with the Federal Reserve and Bank of England, which are considering tighter policies next year.
Still, Mr. Draghi said the ECB’s easy-money policies will have little effect if fiscal policy and structural economic overhauls don’t do their part in Europe, and hinted that Germany should be doing more to support European growth by cutting taxes or raising public investment spending.
“We are accountable to the European people for delivering price stability, which today means lifting inflation from its excessively low level,” Mr. Draghi said at a conference in Washington at the Brookings Institution, a think tank. “And we will do exactly that.”
Annual inflation in the eurozone was 0.3% last month, a five-year low far below the ECB’s target of less than 2% over the medium term. The ECB responded to the risks of too-low inflation with interest-rate cuts and a new bank lending program in June and, three months later, additional rate cuts to fresh lows and a new private-sector asset purchase program that will begin this quarter.
The programs should have a sizable impact on the ECB’s balance sheet and eventually boost inflation back to 2% by 2016 or 2017, Mr. Draghi said. Although he didn’t commit to a specific target, he said the “ballpark” was for the ECB’s balance sheet to return to levels seen in early 2012 when it was at least €700 billion ($890 billion) higher than it is now.