The European Central Bank is set to receive updated data when it meets next month, but according to its president, it is not yet time to tighten monetary policy.
“At its June monetary policy meeting the Governing Council will receive an update of the staff projections and a more complete information set on which it will be able to formulate its judgement on the distribution of risks around the most likely outlook for growth and inflation,” ECB President Mario Draghi told a parliamentary hearing in Brussels on Monday.
“Overall, we remain firmly convinced that an extraordinary amount of monetary policy support, including through our forward guidance, is still necessary for the present level of underutilized resources to be re-absorbed and for inflation to return to and durably stabilize around levels close to 2 percent within a meaningful medium-term horizon,” he said.
The euro zone has been growing for many consecutive quarters, reaching a real GDP growth pace of 1.7 percent year-on-year in the first quarter of this year. At the same time, unemployment has fallen and business sentiment hit a six-year high. However, the bank sees problems with domestic costs, which are still to low to support a durable inflation.
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