The European Central Bank’s asset purchase program may be shielding other countries in the euro area from any knock-on effect from the crisis in Greece, ECB President Mario Draghi stated on Wednesday.
ECB’s program of printing money to buy sovereign bonds was put into effect on Monday, as part of the Central Bank’s efforts to support growth and stabilize euro area inflation in line with its objective.
“We also saw a further fall in the sovereign yields of Portugal and other formerly distressed countries – in spite of the renewed Greek crisis. This suggests that the asset purchase program may be shielding other euro area countries from contagion, which also helps us achieve our monetary policy goals across the euro area,” the ECB Chief stated addressing a conference in Frankfurt.
Draghi admitted that the ECB measures may entail some financial stability risks. However, he stressed that these risks are contained and should they emerge, macroprudential policy is best suited to address them.
With regard to the outlook for growth and inflation in the euro zone, the ECB Chief said that “the slowdown in growth has reversed,” adding that “Euro area real GDP rose by 0.3% quarter on quarter in the last quarter of 2014, which is somewhat higher than previously expected.”
Moreover, he stressed that survey evidence points to further improvements in economic activity at the beginning of this year so that the economic recovery should gradually broaden and strengthen.