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UK referendum: ECB ready for contingencies

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UK referendum: ECB ready for contingencies

Mario Draghi - Photo © European Union 2016 - Source EP

(BRUSSELS) - The European Central Bank is ready for all contingencies following the UK's EU referendum, ECB President Mario Draghi told MEPs as Britons prepared to vote on whether to remain in the EU.

Speaking in a monetary dialogue with the EU Parliament's Economic and Monetary Affairs Committee, Mr Draghi declined to speculate on a possible outcome of the vote.

He did however admit that "it is difficult to foresee the various dimensions of the vote on the markets and the euro area economies."

At the hearing, he also argued that the ECB's monetary policy measures are effective: "The recovery of the euro area economy gained momentum at the start of the year. It is expected to proceed at a moderate but steady pace, supported by solid domestic demand and the effective pass-through of our monetary policy measures to the real economy."

The annual real GDP rate is expected to increase by 1.6% this year and by 1.7% in the next two years. Inflation should pick up towards the end of 2016. Thereafter, inflation is expected to increase further to 1.3% in 2017 and to 1.6% in 2018, as a strengthening economic recovery mobilises unused resources, he said. However, the level of total real investment in the euro area remains more than 10% below pre-crisis levels, he added.

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