ECB's Draghi: Money and credit growth to stay weak until general economic conditions improve

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ECB's Draghi: Money and credit growth to stay weak until general economic conditions improve

FITITOL--> FXstreet.com (Barcelona) - During his speech before the Committee on Economic and Monetary Affairs of the European Parliament on Wednesday , ECB President Mario Draghi suggested that money and lending growth might remain subdued in the nearest future, until the general economic situation improves.

The president said that inflation will stay above 2% in the course of 2012, due to “recent increases in energy prices and indirect taxes” and it should decrease below this level at the beginning of 2013. He said that the Governing Council will “pay particular attention to any signs of pass-through from higher energy prices to wages, profits and general price-setting” in order to assure that medium-term inflation expectations for the Eurozone are firmly anchored.

Mario Draghi pointed out that lending was still weak and stressed the importance of the banks strengthening their resilience further. He referred to ECB's LTRO operations which alleviated banks' tight fundi ng needs and helped monetary policy transmission and reminded that all of the non-standard measures are temporary in nature.

The ECB head also emphasized the importance of the Eurozone nations combining their efforts to achieve financial stability, as the central bank's principle responsibility is maintaining price stability, not dealing with imbalances. He also assured that the painful austerity measures will give positive effects in the longer term.