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Cheap ECB cash still key for euro zone economy: Draghi

Mario Draghi, President of the European Central Bank (ECB), attends an ECB conference titled ‘Communications Challenges for Policy Effectiveness’ at the ECB headquarters in Frankfurt am Main, western Germany, on Nov. 14, 2017.

DANIEL ROLAND/AFP/Getty Images

The euro zone economy remains dependent on cheap credit and the European Central Bank is using the extension of its massive bond buys to push out any expectation for a rise in borrowing costs, ECB President Mario Draghi said on Friday.

Draghi said the ECB was becoming increasingly confident that the euro zone's economic recovery would continue but sluggish growth in wages meant monetary policy needed to remain easy.

"A key motor of the recovery remains the very favourable financing conditions facing firms and households, which are in turn heavily contingent on our policy measures," Draghi said.

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The ECB is on course to buy €2.55-trillion ($3-trillion U.S.) worth of bonds after deciding last month to continue buying bonds until September, or beyond if needed.

It also pledged to keep its interest rates at their current, record low levels "well past" the end of its bond buys.

Draghi said this pledge made continued bond purchases key for pushing market expectations for the first rate hike further into the future, helping to keep rates low.

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