 To the press conference this afternoon the president of the ECB will make a few Introductory remarks and comments and then we'll take your questions afternoon, as in general, let me say a few words on what We have discussed during these meetings I gave a presentation of the situation of the eurozone and I Started from growth and we see that growth is continuing at the steady, but moderate pace After the first quarter when growth was 0.6 percent The following quarter was 0.3 and we expect the same pace for the rest of the year where we see a 1.7 growth for this year 1.64 the year after the Risk for growth are on the downside and this was emphasized by the IMS presentation as well mostly geopolitical risks and Slowdown in world trade, but mostly geopolitical the economic outlook Has for the eurozone has stabilized if we compare it with the last If we compare it with the one we had during the last spring meetings the inflation prospects are of an inflation rate that remains low and Subdued and then by year-end first months next year it should pick up and Move towards 1% and later on above 1% Essentially due to base effects of the energy prices Thereafter the inflation rate would continue to increase to 1.6 percent for the year after and Towards our objective to be reached by the end of the forecast horizon 2018 or the beginning of the year after the Mechanic behind that is that the main driver is our monetary policy and As the recovery will continue the output gap will close Wages nominal wages will start rising and thereafter we'll see inflation going towards a level of 2% below but closer to percent the Governing council continues to monitor closely The possible presence of second round effects Given produced by the fact that inflation has been so low for such a long time that could get ingrained in the wage negotiations We have no firm evidence of anything like that at this point in time But we continue monitoring the situation Also briefly sketched some said some words about inflation expectations where if we take the survey based inflation expectations they Present a picture which is more stable more anchored and more benign than market-based inflation Expectations of course when we look at market-based inflation expectations We have to be aware that they also reflect underlying movement in movements in asset prices and Therefore sometimes they may be a less than accurate representation of what the expectations are I briefly presented the Monetary policy actions and the decisions that we have taken in March I've said that we are completely focused on implementation and Basically, let me read exactly the words of our last press conference Because they are quite They are quite telling So what I said is that the project in the last press conference we had the macroeconomic projections of the growth and inflation for the for the for the for the Forecasting horizon what I said is that a projected path of inflation remains conditional on exceptionally supportive financing conditions Which to a large extent reflect our accommodative monetary policy So the projections are predicated on Maintaining the exceptionally strong monetary support Then I said we will preserve the very substantial amount of monetary support That is embedded in our staff projections and that is necessary to secure a return of inflation Two levels below but close to two percent over the medium term So that's the objective. That's the action that we are undertaking These are the projections that are based on such actions Then I said meanwhile the governing council tasks the relevant committees to evaluate the options That ensure a smooth implementation of our purchase program So as to remove potential obstacles that our purchase programs might encounter and Then what is our program? Our program is intended to go until March or beyond if necessary And it says exactly in any case until the governing council sees sees a sustained adjustment in the path of inflation consistent with its inflation aim there after There after I briefly discussed the other other features or monetary policy I elaborated on its effectiveness Where there is one I gave a few numbers One is particularly telling the lending rates have declined significantly since the start of us a precious program and One way to say how much they declined is That it would have taken under normal circumstances It would have taken a reduction of a hundred basis points in our policy rates To obtain the reduction that we have seen in the bank lending rates Second the spreads across firms between small small and medium-sized firms SMEs and large corporates and between across countries have declined as well Basically eliminating all what all of What we called the read read denomination premium that we saw in 2012-2013 our lending volumes also have grown considerably and From a minus 3% growth so negative growth negative growth month over month that we had seen in 2013 we are now at around plus 2% Month over month so again lending volumes continue to grow steadily and They've been growing for more than two years now the bottom line of this is basically that fragmentation that has Was one of the main problems that we had to face is gone There is no more fragmentation our monetary policy is well transmitted all across the euro area now And then there are some interesting figures about what is the country? We said interest rates have gone down Asset price and moved our monetary policy is transmitted all across the euro area But how much is the contribution to growth of our monetary policy and to inflation and there are some numbers there are estimates tell that we had a 1.3% additional growth cumulative over three years and 1.4% of inflation cumulative over three years in other words if our policy and not been undertaken We would see inflation to be lower by 1.4% and growth 1.3% Now private sector estimates are also available and they are quite more significant Quite bigger. I also remarked that this monetary policy does have side effects of course Low rates for a long time very accommodating monetary policy Have side effects for banks insurance companies pension funds savers and It might also have effects on financial stability So we are monitoring the effects on financial stability we're monitoring them very closely But so far we have not seen Anything that might be defined as a bubble We may see some price increases especially in the real estate sector in some localized Context like large cities in some large cities not all some large cities We've seen real estate price going up, but that's not what define a bubble You also need a significant increase in leverage And we don't see that as a matter of fact as I was saying before landed is growing But it's continued to grow at fairly modest rates But we certainly are monitoring these these sort of local realities and we We closely look at them I've said many times that the way to cope with these local Situations is to think about macro prudential Instruments and silly not about changing monetary policy course Then I briefly analyze the consequence that low rates for long time might have on banks profitability and on insurance companies savers and pension funds I Briefly discuss the situation of the banks in Europe, which as you know is is being discussed and the overall picture shows the overall picture shows shows That there aren't many now. I'm talking about the aggregate of course In within this aggregate we may well have outliers but the overall picture shows that There isn't there has been significant progress as far as solvency is concerned Where we see that the capital ratios moved from 9% in 2012 to 13% in 2015 But there are problems of profitability the rate of return on equity moved from 2.8 to 4.5 percent over the same horizon and that's a lean on satisfactory and Briefly said the low profitability of the banks is caused by low growth first and foremost certainly low interest rates although when we look at the first full year 2015 of negative rates We see that banks profitability in the aggregate has actually increased and the net interest income also as well has gone up But we ought to be aware that within this aggregate there are many different Situations so some banks are affected more and some less by the low rates situation and Certainly as time goes on a considerable adjustment in their business model is needed a third cause for low profitability of course is the high-level or non-performing loans and And The also if one again looks at these are aggregate numbers, so you There are many different situations within this these averages If one looks at the average cost income ratio is About 53% for the euro area, which is higher than other parts of the world's banking systems and And with and there are there are banking situations where this ratio goes up to 70% So clearly change in business model is needed. I Briefly discuss the situation of over capacity as you know the ESRB has Has presented the paper on that But we have to be quite careful on how we define over capacity it's this because we have too many banks or too many people or Profitability is too low with respect to the number of banks And I concluded saying that basically the monetary policy the very Accommodative monetary policy we are having is necessary for the return to growth and for inflation to go back to our objective But clearly it may have side effects and so the conclusion is that to On one hand to maximize the effectiveness of our monetary policy One needs the complement of other policies namely structural policies and fiscal policies But also to minimize the side effects of this monetary policy the complement of such policies is necessary And I stop here now. I'm at your disposal for a few questions I send Romali You don't you don't have necessarily asked two questions. We are not in Frank. It's not Frankfurt Now We we as far as Brexit is concerned. There wasn't really a complete discussion Extending to the developments of the last few days Many speakers have noted that The short-term effects of the outcome of the UK referendum Were less dramatic than people expected Both as far as financial markets are concerned But also as far as the real economy is concerned Does it mean that they there will be no effect? And the answer is no We don't know frankly what's going to happen in the medium term The consequences the event is very significant to think that you won't have any consequence Would be probably to hope for too much But what the exactly this medium-term consequence will be it's hard to say because also it will depend on how Prolonged will be the uncertainty following the outcome of the referendum And what's the final shape of the agreement that will be found between the various parties? But certainly it is another of these political Uncertainties that clouds the outlook for growth and So that that was the main the main Observation the several of the participants and including myself have made Then you are saying about about fiscal policy I Discussed about I discussed fiscal policy today And some extent and Made the following points that because there are there's also a fairly Elaborated policy advice by the IMF as far as fiscal policy is concerned. So the position of DCB is the following Let's start from from the reality from our reality the eurozone reality where we have rules We have the stability and growth part So if rules are well designed and Are respected and are applied Consistently through time and across countries and in a transparent fashion They are beneficial and they are beneficial for two reasons Because they enhance the credibility of the governments that apply these rules and and Enhance strengthen the trust Amongst governments amongst countries that form our union Which also means the opposite that if they are not applied consistently or in a transparent way There will be a loss of credibility and there will be also a loss of trust Now trust is especially important for the countries that form the union because any progress towards a deeper union is based on trust and Any progress towards a deeper union is necessary to make our union more resilient to shocks Less vulnerable than it is today. So that's what that's what what one of the things I said and Then I try to give some meaning to the sentence that it's often said even That basically says that the countries that have fiscal space should use it and countries that don't have it should not Now if we go a little deeper on that we see that there are different categories of countries in our union You have countries that there's a one group of countries where you have full employment by and large full employment a quite significant current account surplus and Average or low debt public debt So these are the countries that in theory would have fiscal space but what sort of policy advice is one where you advise to Make a significant fiscal expansion in a country that's a full employment So here the scope for a fiscal expansion exists But it has to be targeted to increase productivity Supply and productivity, that's the right fiscal expansion in these countries namely Targeted geared to improve education Digitalization certain special infrastructures which are particularly effective in increasing productivity Then you have the other countries where which where where there is high unemployment Either balance current count or small surpluses and high debt and These countries don't have fiscal space So rather than thinking about how to expand the size of their budget They should work on the composition of their budgets Making these budgets more growth friendly than they are today and That means basically lowering current government expenditure and Increasing possibly if there is space public investment Again targeted to high productivity objectives It means lower taxation Especially lower distortionary taxation. So lower taxes and labor That is basically by and large what what I said about fiscal policy Valash Karani And I would just bring your mic. It's easier than to hear Apologies in advance for the two questions one I actually ask you to ask one question a bit short for time and there's many many of your colleagues We'd like to so try my best Please Inflation in 2019. Do you expect to be hitting your target? Mr. Mersh in a speech a few days ago said he wouldn't be surprised if If you were already a target when the projections come out. Is that also your expectation? I'm sorry exactly. What is my expectation? Are you do you expect to hit your inflation target already in 2019? Our current macroeconomic projections foresee that that our expect our inflation rate will pick up During the course of 2017 It's and then we'll continue moving 2018 towards the objective of an inflation rate, which is close but below 2% That is but this as I said before is predicated on maintaining the extraordinary Support of our monetary policy. Thank you Claire Claedron's Financial Times What was there any discussion of the Bank of Japan's latest measures and specifically the pledge to target inflation of above? 2% and targeting a specific year on 10 year bonds and well If not just more broadly are these ideas the sorts of ideas that you or other central banks could could consider No, there wasn't as far as I'm concerned We might have been on the side of different meetings, but there wasn't Any explicit discussion of these measures and as far as we are concerned. We never discussed them really Mr. President, can I ask you a more open question? I wonder if you could just share with us your experience of the IMF World Bank meeting this year and Whether in the conversations you've had both about Europe profitability Investment and growth you're going to come away more or less optimistic or pessimistic about 2017 well, it's I know it's gonna be a disappointing answer, but I would I would say neither In the sense that we see our recovery Firming up in Europe and we see the situation in some emerging markets improving a situation which had been continuously deteriorating In the last year and a half at the same time So that there are there are grounds for optimism on one hand on the other we see that there are significant geopolitical risks ahead and And and and when we agree with the IMF on the point that these risks are on the downside so As I said neither It's If we compare let's put this way if we compare these meetings with the previous meetings situation is better That's that's what I can say Chris Charles Thank you in relation to your financial stability mandate Do you feel that you need the competency to? Regulate clearing within either the eurozone or the EU in future particularly after Britain leaves Well, this is a matter for for really for legislators lawmakers to decide The what I know is that it would as you know we the ECB doesn't have competence over clearing of Securities, but it does have competence over payments in euros. So Why doesn't have competence because the directive the email directive doesn't give it to the ECB and Our statute as well if I'm not mistaken is an article in our statute that doesn't say that so either the lawmakers amend our statute or and a Man the IMR directive, but it's their hands. It's not up to us to decide Thank you. I sound a speciale Alessandro speciale Bloomberg news Mr. President in recent months Your calls on governments to deliver on structural reforms have become more intense. Is there a sense that you are? Losing confidence or losing patience in the government's capacity to Use the opportunity given by the ECB Accommodative monetary policy No, it's not a matter of losing patience or capacity that would be presumptuous of me To to say anything like that But there's no there's no doubt that this monetary policy gives time to governments to act We are convinced that a commodity monetary policies Actually are a good incentive to implement reforms We're not convinced that high interest rates force or or are the right incentives for governments to undertake reforms We with few exceptions. I think we've discussed this on other on other occasions. There are clearly certain reforms linked to the budget that When that that become urgent because markets there are periods when markets refuse to finance the budgets of some government So they are being done But many other structural reforms just think about education the judiciary are not linked to the level of interest rates Offer this matter political reforms constitutional reforms are not linked to the level of interest rates. So in fact The low level of interest rate for some instance in some cases is actually makes these reforms easier but But governments know That time is limited that this accommodate this month. This is accommodating monetary conditions will not be forever and This is the sense in which in which the ECB often invites the governments to undertake the reforms and And it's quite clear that that as I said before it also enhances the effectiveness of our monetary policies of our monetary policy and makes the And makes the side effects that our policies might have less significant Because the as I was saying before the the monetary accommodation Would have to last less long last question to the lady in the frontier Stefania spatti radio cor is there Are you concerned about the level of divergence between the ECB's monetary policy and that of the Federal Reserve in other words? Is there a level of divergence that would make central bankers not comfortable? Well, I wouldn't put this way. We are clearly we are killing on on different paths the recovery in in the euro area is is in its early stages and And are reaching the objective of our inflation rate is also Quite is distant in time So necessarily our monetary policy is different and the parts are divergent in especially in perspective But I wouldn't say that there is concerned about the degree of divergence Okay. Thank you very much. Thank you