Mario Draghi, President of the ECB,Vítor Constâncio, Vice-President of the ECB,Frankfurt am Main, 26 October 2017
Ladies and gentlemen, the Vice-President and I are very pleased to welcome you to our press conference. We will now report on the outcome of today’s meeting of the Governing Council, which was also attended by the Commission Vice-President, Mr Dombrovskis.
Based on our regular economic and monetary analyses, today we conducted a thorough assessment of the outlook for inflation, the risks surrounding this outlook and our monetary policy stance. As a result, the Governing Council took the following decisions in pursuit of its price stability objective.
First, the key ECB interest rates were kept unchanged and we continue to expect them to remain at their present levels for an extended period of time, and well past the horizon of our net asset purchases.
Second, as regards non-standard monetary policy measures, we will continue to make purchases under the asset purchase programme (APP) at the current monthly pace of €60 billion until the end of December 2017. From January 2018 our net asset purchases are intended to continue at a monthly pace of €30 billion until the end of September 2018, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim. If the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, we stand ready to increase the APP in terms of size and/or duration.
Third, the Eurosystem will reinvest the principal payments from maturing securities purchased under the APP for an extended period of time after the end of its net asset purchases, and in any case for as long as necessary. This will contribute both to favourable liquidity conditions and to an appropriate monetary policy stance.
And fourth, we also decided to continue to conduct the main refinancing operations and three-month longer-term refinancing operations as fixed rate tender procedures with full allotment for as long as necessary, and at least until the end of the last reserve maintenance period of 2019.
Today’s monetary policy decisions were taken to preserve the very favourable financing conditions that are still needed for a sustained return of inflation rates towards levels that are below, but close to, 2%. The recalibration of our asset purchases reflects growing confidence in the gradual convergence of inflation rates towards our inflation aim, on account of the increasingly robust and broad-based economic expansion, an uptick in measures of underlying inflation and the continued effective pass-through of our policy measures to the financing conditions of the real economy. At the same time, domestic price pressures are still muted overall and the economic outlook and the path of inflation remain conditional on continued support from monetary policy. Therefore, an ample degree of monetary stimulus remains necessary for underlying inflation pressures to continue to build up and support headline inflation developments over the medium term. This continued monetary support is provided by the additional net asset purchases, by the sizeable stock of acquired assets and the forthcoming reinvestments, and by our forward guidance on interest rates.
Let me now explain our assessment in greater detail, starting with the economic analysis. The economic expansion in the euro area continues to be solid and broad-based. Real GDP increased by 0.7%, quarter on quarter, in the second quarter of 2017, after 0.6% in the first quarter. The latest data and survey results point to unabated growth momentum in the second half of this year. Our monetary policy measures have facilitated the deleveraging process and continue to support domestic demand. Private consumption is underpinned by rising employment, which is also benefiting from past labour market reforms, and by increasing household wealth. The upswing in business investment continues to benefit from very favourable financing conditions and improvements in corporate profitability. Construction investment has also strengthened. In addition, the broad-based global recovery is supporting euro area exports.
Risks surrounding the euro area growth outlook remain broadly balanced. On the one hand, the strong cyclical momentum, as evidenced in recent developments in sentiment indicators, could lead to further positive growth surprises. On the other hand, downside risks continue to relate primarily to global factors and developments in foreign exchange markets.
Euro area annual HICP inflation remained unchanged at 1.5% in September. Looking ahead, on the basis of current futures prices for oil, annual rates of headline inflation are likely to temporarily decline towards the turn of the year, mainly reflecting base effects in energy prices. At the same time, measures of underlying inflation have ticked up moderately since early 2017, but have yet to show more convincing signs of a sustained upward trend. Wage growth has increased somewhat, but domestic cost pressures still remain subdued overall. Underlying inflation in the euro area is expected to continue to rise gradually over the medium term, supported by our monetary policy measures, the continuing economic expansion, the corresponding gradual absorption of economic slack and rising wage growth.
Turning to the monetary analysis, broad money (M3) continues to expand at a robust pace, with an annual rate of growth of 5.1% in September 2017, after 5.0% in August. As in previous months, annual growth in M3 was mainly supported by its most liquid components, with the narrow monetary aggregate M1 expanding at an annual rate of 9.7% in September 2017, up from 9.5% in August.
The recovery in the growth of loans to the private sector observed since the beginning of 2014 is proceeding. The annual growth rate of loans to non-financial corporations increased to 2.5% in September 2017, after 2.4% in August, while the annual growth rate of loans to households remained stable at 2.7%. The euro area bank lending survey for the third quarter of 2017 indicates that net loan demand has continued to increase for all loan categories. Credit standards have further eased for loans to households, while they remained broadly unchanged for loans to enterprises. Banks’ overall terms and conditions on new loans have continued to ease for all categories of loans.
The pass-through of the monetary policy measures put in place since June 2014 continues to significantly support borrowing conditions for firms and households, access to financing ‒ notably for small and medium-sized enterprises ‒ and credit flows across the euro area.
To sum up, a cross-check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed the need to recalibrate the policy instruments to ensure the degree of monetary accommodation necessary to secure a sustained return of inflation rates towards levels that are below, but close to, 2%.
In order to reap the full benefits from our monetary policy measures, other policy areas must contribute decisively to strengthening the longer-term growth potential and reducing vulnerabilities. The implementation of structural reforms in all euro area countries needs to be substantially stepped up to increase resilience, reduce structural unemployment and boost euro area productivity and growth potential. Regarding fiscal policies, all countries would benefit from intensifying efforts towards achieving a more growth-friendly composition of public finances. A full, transparent and consistent implementation of the Stability and Growth Pact and of the macroeconomic imbalance procedure over time and across countries remains essential to increase the resilience of the euro area economy. Strengthening Economic and Monetary Union remains a priority. The Governing Council welcomes the ongoing discussions on further enhancing the institutional architecture of our Economic and Monetary Union.
We are now at your disposal for questions.
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The first question is about the composition. Did you discuss at the Governing Council meeting the composition of the APP starting from January, so the proportions of the different components?
The second question is about the alternative scenarios; what alternative scenarios did you discuss apart from the one that finally made the cut?
Draghi: No, we didn't discuss composition. There will be a press release, a press communique at 15:30 CET detailing more about – well, developing transparency and detailing more about the – how the asset purchase programme will evolve in 2017. But we didn't discuss really the composition. The only thing that I can say about that is that we will continue buying sizeable quantities of corporate bonds in the programme and then you get the rest, yes. Well, I can anticipate some of the things you're going to see shortly. So as of January 2018, the Eurosystem will publish ex ante the monthly redemption amounts for each component of the APP for the Eurosystem as a whole for the following rolling 12-month period. So the Eurosystem, as you know, conducts the reinvestments in a flexible and timely manner in the month they fall due or in the subsequent two months if needed.
Therefore net purchases per jurisdiction may fluctuate owing to the timing of these reinvestments. Reinvestments will take place in the same jurisdiction as principal redemptions with the aim to minimise deviations from the capital key. So you'll get the press release shortly after the press conference. But clearly, the press release would also devote some space to communicate in a transparent way how this reinvestment – which is becoming more and more important, of course – is going to be carried out.
We actually didn't discuss alternatives scenarios. The discussion was there were – let me say this; the atmosphere was pretty positive. All the Governing Council members in their interventions emphasised the better conditions, the growth momentum, as I just said unabated growth momentum and improving labour market conditions. They stressed how this number, seven million, almost seven million jobs in the last four years, it actually continues to increase. The labour market, the unemployment goes down. Both private consumption and private investment, which is also remarkable, because for a long time we haven't seen any significant upward trend in investment, is actually picking up. They emphasised how the earning capacity of households is increasing. So the real disposable income is actually increasing because – mostly because of gains coming from greater employment and how household wealth is increasing.
This also being supported of course by our monetary policy. So on inflation, of course this positive picture on the growth side is – on inflation is different because we – inflation is still not at our objective. We foresee 1.5% this year, 1.2% next year. As I said I think last time, too, we foresee a V-shaped profile of inflation mostly due to a base price effect of the oil, of energy, and then 1.5% the year after. So all this in the end converged on this scenario that I've just presented. Of course there was some difference of views on some aspects of this. But the scenario that was discussed this morning was the one I've just mentioned.
On the new guidance that you provide on reinvestment that they will continue for an extended period of time and for as long as necessary, could you explain a bit more of what you mean with as long as necessary? How this guidance interacts with the one on rates, is there a sequence? Are they for the same period of time, more or less?
A second question is on the guidance instead on QE. You said you are still ready to expand in size and duration the programme, if necessary. Is it still possible to expand in size? Do you still have room to expand the programme? Or do you foresee that there could be scarcity problems going ahead? In other words, how credible is this commitment to expand the size of QE if necessary?
Draghi: Now, the guidance on reinvestment is not related to rates. The sequence stays what it is, namely this – the interest rates will stay and they remain at their present – are expected to remain at their present levels for an extended period of time and well past the horizon of our net asset purchases. However as we moved forward not only this year but also in a previous years, the amounts that we've purchased, the stock has become more and more important. This year as we continue asset purchases, it will keep on increasing. So the commitment that the Eurosystem has taken today is that it will reinvest the principal payments for maturing securities purchased under the APP for an extended period of time after the end of its net asset purchases and in any case, as long as necessary. So there isn't any specific link with interest rates. There is no link here.
Now, of course as I said I want to stress the importance of reinvestment. I'll never forget that in December 2015 in one of my press – usual periodic press conference like this, we announced a series of measures. We also said, 'Look, we are going to reinvest this.' Basically, there was no reaction, not at all. Not only that but it was actually considered to be totally marginal and in fact there were many sort of wrong estimates of what these potential reinvestments might be. Now, since then we bought a lot of bonds. So this stock now is sizeable and has become an important component of our – as we say here, this continued monetary support is provided by the additional net asset purchases by three elements. The sizeable stock of acquired assets and the forthcoming reinvestments, so the stock and the reinvestments, and by our forward guidance on interest rates. So the three elements interact, act together.
Now, on the flexibility, I think on the credibility, on the potential constraints, I think you've been asking – not you [personally]– been asking this question - “Will you make it?” - since the very beginning of the QE programme, or at least at regular intervals. Each time we gave plenty of evidence that both our design is flexible enough to cope with the potential limits, and we gave plenty of evidence that the Governing Council is committed to that. We didn't discuss parameters or limits, anything today.
I have a question also on reinvestment. So just looking at next year, come September and the official programme might end – I say might. Would reinvestments actually make up from the volume side for the normal QE? So my question is, in volumes how big are reinvestments? You must have calculated that.
Draghi: I don't have a number of that today, but you will get much information in the press release. Unless the Vice-President has a number on that, the investments will be carried out in a flexible way. The modalities of the reinvestment are going to be described in this first press release. But let me add just one other thing. We'll continue buying these, by the way, according to the present conditions until December. So as far as any clarification is concerned about the future, we have time until I would say December or even earlier.
Given the concern in the markets that there are not a lot of bonds left if you come to an end in September, how credible do you think such a pledge might be going forward, like to have a very flexible extension potentially to QE?
Draghi: Now, that's another question. That's the same question as before, so one thing is our reinvestment and that is going to be massive, of course. The Vice-President wants to, sorry, to say something on that?
Constâncio: No, you will have the numbers because we announce precisely at 15:30 CET that we will start disclosing the pattern and amounts of reinvestment per month for the following 12 months. So you will have all those numbers – which are quite sizeable per month. I think on average we are talking about many billions per month, on average. There are big differences from month to month because it depends on the dates of when the bonds reach maturity. But of course reinvestment is then sizable, say like €10 billion per month. But it's just to restore the amount of the stock. The amount of the stock in itself produces an effect, of course, on markets because we are talking about asset markets where the stock is always potentially in play. So the stock is also important for the transmission of monetary policy.
Draghi: Let me just make one point; the press communique will not contain a number at 15:30 CET.
Constâncio: No, the disclosure will be a follow-up, yes.
Draghi: Yes, so it's going to be carried out in the way I kind of described before, in a flexible way and you will get more information in the press communique. Now, on the other question it's the same as before. You see, so far you've been – you, as I said; all of you have been asking this question on and on. Basically, our programme is flexible enough that we can adjust its size. We can adjust. We can carry through smoothly and that's been the evidence we've given until now. The Governing Council is committed to that. Now, this time of course we are also going to have the reinvestments of the existing – of the maturing securities and we still have our forward guidance. So in terms of our capacity to achieve or to have a monetary policy stance which will support the sustained inflation objective – self-sustained inflation objective – we are well placed.
First question, you seem to have emphasised a lot in recent weeks the forward guidance on interest rates, that rates will remain on hold well past the horizon of QE. Would you care to maybe say a little bit more about what is meant by ‘well past’? We now have some markets predicting the first hike is going to be in 2020, so is that right? Or would you say 2019 is a more reasonable estimate?
For my second question, the Bank for International Settlements has been advancing the argument that national central banks now have far less control over inflation because wage setting goes more to global and technological factors than it does domestic demand. Would you accept that argument and if so, how do you adapt to that?
Draghi: The ‘well past’ is a concept that is such that it should anchor interest rate – short-term interest rate expectations in a way that is supporting the achievement of our inflation aim, namely a self-sustained durable convergence of inflation to our objective of an inflation rate which is below but close to 2%.
As far as the second question is concerned, I think I wouldn't rule that out. I wouldn't rule out the fact that there are international global factors underlying the inflation development. We all know about the global value chain. We all know that delocalisation of certain production centres and more generally the globalisation and the different retail networks that are operating today. But our view is and our policy is designed and based on the – on a view that looks at the output gap and looks at the unemployment rate, defined in various ways of course. We are now looking at the broad definition of unemployment, and looks at the factors that will cause an increase in inflation as the unemployment rate will decrease and as the output gap will shrink. So our attention today is really more on the factors that are close to us. In other words, there may be global factors but we can't do anything about that, but we can do a lot about domestic factors.
First and foremost is the speed of response of nominal wages to the closing output gap. That's where our monetary policy becomes essential and that's what our monetary policy has in a sense contributed to create more than seven million jobs in four years.
Recent ECB statements seem to indicate an increased focus on the role of the market. With a reduction plan set to take effect in fewer than 70 days, how has the ECB paved the way for today's announcement through its communications to the public? That's my first question.
My second is, there's a lot of differing views inside the Governing Council, at least according to what some of the people say publicly. Was the Governing Council unanimous today in its decision with regards to the size and the longevity of the plan?
Draghi: As far as the first question is concerned, my understanding – of course I am with you now – but my understanding is the market reaction was pretty muted to our announcement, to our policy announcement in spite of the fact that it's a policy announcement of a certain importance, which seems to say that our communication to the market has been pretty effective. Also we are going to have a communication conference in two weeks' time. So you're cordially invited to participate there and it's jointly organised with the Federal Reserve. It's going to be here in Frankfurt and I'm pretty sure there will be many interesting insights about communication there. Now, on the second point, no, it was not unanimous. There were different viewpoints. I would characterise the discussion as ranging between consensus, broad consensus on several issues and large majority on other issues. More precisely – well, first of all let me step back.
I have said several times that the present situation is a situation that does call for confidence that we will be able to reach our objective. After all, the overall economy, the growth rate, unemployment, the labour market, what I have listed before are all positive indications – and the survey data as well show an increase in momentum – are all positive indications that we are moving towards a shrinking output gap and an improving labour market, which eventually will produce higher nominal wage growth and therefore higher inflation. But this confidence is also tempered by the fact that we know that all this process, it still relies very much on our monetary policy support. So it's not self-sustained yet and therefore we must be patient and we must be persistent. Basically, the discussion today was reflecting different degrees of confidence or patience, persistence and prudence.
By and large, there wasn't much of a disagreement about the flows or other parts of the programme. There were different views about whether, should an end date have been announced or not? But again the large – and here that's the area where it's large majority and not consensus – the large majority of the Governing Council members preferred to keep it open-ended.
Does a new ECB – European Central Bank – proposal involve greater provisions for the devaluation of an NPL, non-performing loan credits? Doesn't this [go] against the accommodative monetary policy and against a start-up phase of the economy of some countries?
The second question, excuse me for a direct question; is it true that the central bank has a budget expansion ceiling of €2,500 billion?
Draghi: I would give the floor to the Vice-President for the first question.
Constâncio: On the first question.
Draghi: On both questions if you want?
Draghi: No? Okay.
Constâncio: No, regarding the first question, let me recall what was the decision that was announced. It's a decision about new loans, new flows of loans and potentially new NPLs that would be formed. There is then a target for the formation of provisions when new NPLs would be – would emerge so that the formation of provisions would have to go up to 100% of the exposures during two years in the case of the exposures are not secured by any collateral, and seven years if they are secured by collateral. So it's this decision that was taken and so it means of course that with a stronger economy and better management of credit risk, the levels of NPLs for new loans should be way below what they were during the crisis, of course. So we are talking about a total different reality.
The second thing is, at the same time next year enters into force the International Financial Reporting Standard 9, which changes completely the calculation of impairment costs and provisions, meaning that from January next year, mandatory in accounting terms any new financial asset – say the loan – that goes into the books of the bank already has to calculate the expected loss during the next 12 months. So there will be some provision charge for any new loan as a result. If after that recognition moment there is some aggravation of the prospect of that asset not performing well, then the accounting rules – the new accounting rules – impose that the expected loss for the whole life of the asset has to be front-loaded and immediately recognised as a cost.
So these accounting rules reinforce very much the treatment of new NPLs, so go in the same direction and can be meaningful, because indeed as I said, may lead to a full recognition of losses for the whole life of the asset so – which means that the new rule also or the new target for the treatment of NPLs can be more or less already accommodated by what will be the imposition of the new accounting rules. So the thing is not adding perhaps too much to what the IFRS 9 would impose so – which means that the targets as they were defined are important, but are at the same time reasonable and in complement with the change in the accounting rules. So that's important to ensure that from now on, the banks are careful enough in managing credit risk so that there is no further undue accumulation of NPLs.
Then there was also the announcement that we are now looking about the stocks, but nothing has been decided about that yet. We are looking of course very carefully because it's different to deal with presumably the new NPLs and deal with targets for the whole stock. Final comment: the targets that were then defined will – the implementation and the compliance with these targets will be subject also to a supervisory dialogue. The banks will have to comply or explain and they can explain that they have done the utmost to comply and could not do it for understandable reasons. So it's in the context of a supervisory dialogue that these new targets will be applied in order to contain for the future this problem of NPLs so that we don't have again an accumulation that creates, as we now are seeing, problems to the profitability of banks.
Draghi: I'm sorry, I didn't understand your second question.
Constâncio: Second one, me neither.
Is it true that the central bank has a ceiling of the budget expansion ? [Inaudible] €2,500 billion, there is a ceiling.
Draghi: The answer is no.
In the US the Fed has opted for a gradual wind-down of the purchases and now the ECB – you as the ECB have taken a different approach; why?
My second question: today's decision comes at a time where the Fed has already raised rates and the Bank of England might raise rates soon. So do you think the global monetary cycle is turning now?
Draghi: The monetary policies of different jurisdictions reflect the different positions they are in achieving their objectives and the different positions the economies have in the business cycle. As such, the US recovery is way more advanced than ours. And the inflation developments, because we are concerned about price stability, are way behind. That justifies a difference in monetary policy stance. Our decisions today are consistent with our – with the feedback rule we've been having all throughout. When the general conditions improve and we see that our inflation objective is closer, we have downsized asset purchases in the past or we have upsized them in the past as well. This is very much following the same logic.
On one hand it does reflect an increasing degree of confidence in our capacity to reach a self-sustained inflation objective. On the other, it takes stock of the fact that we are not there yet. As a matter of fact, headline inflation if anything will decline in the coming months. Our annual projections that I mentioned a moment ago are for 1.5% this year, 1.2% next year and 1.5% again the year after. So we aren't there yet. We are not there yet and that explains the difference in our stances, basically.
The Catalan government sent some emails to the ECB and apparently a letter to you.
Okay, but they say that the political instability in Spain will have an impact in the financial stability in Spain and in the eurozone as a whole. In fact we will have seen two banks moving its headquarters and some impact in the deposits. My question is, is political uncertainty in Catalonia now a risk for financial stability in Spain and in the euro area as a whole?
Draghi: You know, it's very, very difficult to comment about developments that change every day. So it's just very difficult. Of course we are following what's happening. The importance of what's happening is significant. To conclude now that there will be financial stability risks will be premature; we have to see what's going to happen. But rest assured we look at that with attention, great attention.
In the past you have always stressed when you were buying €80 billion or €60 billion that there will be no abrupt end to the purchases in order to avoid cliff effects. Now, given the new amount of €30 billion, is that still valid? So will there be in any case a phasing out of the purchases? Or from that level would it possible to stop them immediately from one month to the other?
You've also stressed the sequencing between net purchases and interest rate hikes. Is there also such a sequencing between interest rate hikes and balance sheet reduction? For example the Fed in the US had always argued that it would only start reducing its balance sheets once the interest rate normalisation was well underway. Is that a pattern you would also follow?
Draghi: Well, the answer to the second question is, we really – no, we haven't discussed it at all. To the first question, I said before that the decision today is for an open-ended programme. I may add certainly it's not going to stop suddenly. It's not going to stop suddenly, it's never been our view that things should stop suddenly. But it's open-ended and the large majority of the Governing Council expressed its preference for keeping it open-ended. This is because basically, for a variety of reasons. One of course is to reaffirm a steadfast commitment of the Governing Council to pursue the price stability objective. But also it's due to the fact that there is still a large amount of uncertainty and therefore prudence has inspired many governors to opt for this possibility. So basically, that's what we decided. That's right. Sorry, you…
Constâncio: No, I am saying that the second question; we do have a sequence which is defined and reaffirmed today so…
Draghi: No, but the question here was the sequence about net asset purchases is defined today. The new sequence you are pointing out was actually the same question I have received before. There isn't any sequence between the balance sheet – the stock and the interest rates. No, we have not discussed that.
You've reiterated the expression ‘well past’ in terms of your sequencing. If I go back again to the example of the Fed, the Fed took 15 months before they raised rates after they stopped their purchases. Is that the sort of time frame that you have in mind? Of course you don't like to be compared with the Fed from your previous answers. But the situation may be different, but is that the sort of time frame that we're thinking of? Or is it six months or 12 months?
Another point is, were there governors or members of the Council that were not as confident as you are about the convergence to the objective?
Draghi: No, as far as the second question is concerned, we're really talking about nuances. The general picture is a picture of a part of the world which is doing pretty well. Growth is growing and momentum is also growing and labour market and everything is doing – well, I think it's, I can't remember how many quarters of consecutive growth, 17 I believe. Now it's a 0.7% growth as I just mentioned, which was higher than the 0.6% that was expected. So at the same time we don't see yet an encouraging sign neither in the nominal wage growth nor in underlying inflation, although one has to say underlying inflation is slightly – is higher than it was in historical trough at the year-end last year. But it's still quite far from any historical average. So it was basically most – as I said the large majority if not consensus was in the end for a solution for a decision which was prudent. The bottom line is prudent, which was both confident but also patient and persistent.
Now, the time frame – I think I said it before – we don't have a fixed time frame. When we define a medium-term concept it's not a fixed time frame; it really depends on how we are approaching to the achievement of our objective of price stability. I think comparisons with other jurisdictions are not really appropriate because of, in a sense, what I said before. Our, first of all, institutional differences but also different positions in the business cycle, different formations, price formation mechanisms, different labour markets, different speeds of response. So in a sense, our experience with monetary policy has been quite different from what the Fed has done until now.
The statement says, 'If the outlook becomes less favourable' and I was wondering what if it becomes more favourable? Would you be willing to decrease the APP in terms of size and/or duration?
Draghi: Well, this is today's decision and as up to – this is taken on the basis of information we have today. It's a commitment to undertake these purchases and to have the reinvestment of the principal payments from maturing securities purchased under the APP for an extended period of time after the end of its net asset purchases, in any case or as long as necessary. Then we have the full allotment, the longer-term refinancing operations, the fixed-rate tender procedures with full allotment. Then we have the forward guidance of interest rates and this is based on the present information set. This is our commitment; we don't foresee changes now.
I had a question on the bond scarcity issue. I think you mentioned last month there might be fresh decisions that would be delayed until December. On the bond scarcity is that one of the decisions that might be delayed until December that you mentioned last month? Or is that something that the ECB is likely to decide to change over the parameters of QE over the coming months? You mentioned that keeping QE open-ended was to reaffirm your commitment. Wouldn't enlarging the parameters of QE also have that effect?
The second question was on the full allotment decision; I wondered, you know, what is the significance of that? Is there any read across to interest rates?
Draghi: Now, the answer to the second question is no; it's simply the – a part of the monetary policy decisions taken today, the decision to ensure adequate liquidity. So we don't have any relationship between that and the forward guidance of interest rates.
On the first just let me answer, saying that there were two issues that were not discussed today – well, probably many others – but as far as relevant to our today's decisions, two. One was parameters change and the other one was the sequence.
Some analysts have talked about whether there would be some risks that would be exposed as you start to reduce your quantitative easing. In other words, perhaps asset prices that have gotten too high or companies that have gotten used to low interest rates would have trouble with higher interest rates. I just wonder if that's something you've looked at and whether it's something you're concerned about.
Draghi: Well, it's certainly something we are looking at. We are not concerned about that because we – as I said before we'll continue – and the press communique will have words to this extent – we'll continue purchasing ample quantities of corporate bonds. So we certainly monitor that development like we do on other developments in various markets. But there isn't anything special that one would flag about that.
Back in December you announced the reduction of the QE, but you insisted it shouldn't be called tapering. After this new recalibration can we assume that the ECB is now tapering, with that word?
One more question; has the ECB bought more Spanish debt than usual in order to contain the recent volatility?
Draghi: So the answer to the first question is no. As a matter of fact, there was also another thing that's not discussed. We discussed whether it was proper having open-ended or closed end. As I said a few members would rather have a closed end date or an announcement or some signal that we would go towards that. But then the large majority of the Council preferred to have it open-ended.
But there was another thing we didn't discuss: tapering. I don't think this word had been pronounced, if I am not mistaken. In any event it was not discussed and so this is not tapering; it's just a downsize. As I said before, it's consistent with our feedback rule which had been – we've been using all throughout.
Now, the second question, the answer is no because our mandate is price stability and not what's happening in different countries.