Draghi suggests monetary stimulus will continue

European Central Bank President Mario Draghi hinted on Friday that the central bank is likely to extend its €1.7trn bond-purchase programme next month.

Speaking at the European Banking Congress in Frankfurt, Draghi said the eurozone economy remains heavily dependent on monetary stimulus.

“Despite the uplift to prices provided by the gradual closing of the output gap, a sustained adjustment in the path of inflation still relies on the continuation of the current, unprecedented financing conditions.

"It is for this reason that we remain committed to preserving the very substantial degree of monetary accommodation, which is necessary to secure a sustained convergence of inflation towards level below, but close to, 2% over the medium-term.”

Draghi noted a rebound in employment but also highlighted three main risks to growth, which include geopolitical uncertainty, weak bank profits and weakness in inflation dynamics.

“We cannot yet drop our guard,” said Draghi, adding that the ECB “will continue to act, as warranted, by using all the instruments available”.

The ECB kicked off its quantitative easing programme at the start of 2015, but the stimulus is due to end in March next year.