A slide in stock markets this year has not materially impacted euro zone financial conditions, European Central Bank President Mario Draghi said on Monday, suggesting that policymakers remain calm about the recent market volatility.
Draghi added that euro zone inflation would continue to rise towards the bank’s target of almost 2 percent but uncertainty over the degree of slack in the economy requires patience.
“While we remain confident that inflation will converge towards our aim over the medium term, there are still uncertainties about the degree of slack in the economy,” Draghi said in the ECB’s annual report.
“A patient, persistent and prudent monetary policy therefore remains necessary to ensure that inflation will return to our objective,” he added.
Commenting on stock markets, the Draghi said that markets were already vulnerable to an abrupt repricing of risk but the impact of the volatility is so far minor.
“These risks materialised in global equity markets in early 2018, although to date without significant spillovers to euro area credit markets and hence broader financial conditions.”
Major euro zone shares are down 2.7 percent this year while bank stocks, a crucial indicator for the ECB, are down 3.1 percent.