The head of the European Central Bank (ECB) Mario Draghi said that the regulator will avoid changes in its incentive plans that are unexpected for investors. He emphasized that inflation remains too low, while US trade policies and a stronger euro are worrying.
"Our policy adjustments will remain predictable, and they will continue at a moderate pace," said Draghi, opening the annual conference of the ECB and its observers in Frankfurt.
"We still need additional evidence that inflation is moving in the right direction. Therefore, monetary policy will remain patient, consistent and prudent."
The euro weakened after Draghi said that the recent strengthening cannot be explained solely by economic growth in the region. The single currency exchange rate, which increased by almost 17% last year, fell by 0.2% to $ 1.2367.
At a meeting on March 8, the ECB unexpectedly abandoned its promise to "increase the size and / or duration of the asset purchase program" if economic conditions worsen.
Although this move reflects growing confidence in the economic recovery, Draghi warned in a speech on Wednesday that the risks to the eurozone still persisted, the prospects for wage growth and economic weakening remain uncertain.
The ECB intends to make monthly purchases of assets worth € 30 billion at least until the end of September. The regulator expects that key interest rates "will remain at their current levels for a long period of time and this will continue after the completion of the asset purchase program."
Draghi emphasized that there is a “very clear condition” for stopping the purchase of bonds: a steady adjustment of the inflation path towards the goal – “just below 2%” in the medium term.
The head of the ECB also noted the volatility observed in financial markets in February. According to him, "any further sharp price changes" should be closely monitored.
Draghi paid particular attention to the risks of a trade war. Earlier, US President Donald Trump decided to introduce duties on imports of steel and aluminum. The European Union has promised to respond in this regard.
Although the initial impact is likely to be small, “there is a likelihood of potential secondary effects that could have much more serious consequences,” warned the head of the ECB. "These include the risk of retaliation against other goods and the escalation of tension in trade, as well as the likelihood of a negative effect on trust, which, in particular, will affect business investment," he said.