World Economy

Europeans want ‘tangible benefits’ from EU institutions: ECB’s Draghi

Mario Draghi
Daniel Roland | AFP | Getty Images

The European Union must show that it benefits people's lives, European Central Bank (ECB) President Mario Draghi said on Monday, as the bloc remains in limbo following the U.K.'s Brexit vote.

"Europeans are calling on our institutions to bring tangible benefits to their everyday lives. We need to respond to this appeal with action," Draghi said in Brussels at a European Parliament hearing.

"This is why I am here today: Not only to demonstrate once again the importance that the ECB places on being accountable to EU citizens, but also to discuss with you how the ECB is acting to fulfil the mandate that was democratically conferred upon us," he later added.

The ECB sets monetary policy in the 19 European Union countries that use the euro currency and are referred to as the euro zone.

Euro zone 'resilient'

Draghi said that so far, the euro zone economy appeared "resilient to global and political uncertainty, notably following the U.K. referendum outcome."

"The initial impact of the vote has been contained and the strong financial market reactions, such as equity price falls, have largely reversed," he said.

European markets

However, he warned of a "substantial weakening" in foreign demand since the Brexit vote in June, which is seen dampening export growth.

The ECB sees the euro zone real economy growing by 1.7 percent in 2016 and 1.6 percent in each of 2017 and 2018. Inflation is seen averaging 0.2 percent this year, rising to 1.2 percent next year and 1.6 percent in 2018.

The central bank held its key interest rates unchanged at record lows earlier this month, as expected.

"Inflation continues to remain at low levels, reflecting past declines in oil prices and weak wage growth," Draghi said on Monday.

On Wednesday, Draghi will address policymakers at the German Bundestag.

This will be "an opportunity for him to prepare the political ground for an extension of quantitative easing beyond next March, particularly if the politicians fail to heed his calls for governments to provide substantive new support for growth," Chris Scicluna, head of economic research, said in a note on Monday.

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