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Draghi comments at ECB news conference

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(GlobalPost/GlobalPost)

(Reuters) - FRANKFURT, June 5 (Reuters) - The European Central Bank cut interest rates to record lows on Thursday, imposing negative rates on its overnight depositors to cajole banks into lending more and to fight off the risk of deflation.

Following are comments by ECB President Mario Draghi at a post-meeting news conference.

ABS and MROs

"ABS preparatory work ... "under this initiative the euro system will consisder purchasing simple and transparent asset-backed securities with underlying assets consisting of claims against the euro area non-financial private sector".

"We decided to continue conducting the MROs as fixed-rate tender procedures with full allotment for as long as necessary and at least until the end of the reserve maintenance period ending in December 2016."

TLTROs

"All TLTROs will mature in September 2018 ... counterparties will be entiteld to borrow, initially, seven percent of the total amount of their loans to the euro area non-financial private sector, excluding loans to households for house purchases...

"The combined initial entitlement amounts to 400 billion euros. To that effect two successive TLTROs will be conducted in September and December 2014.

"In addition, from March 2015 to June 2016 all counterparties will be able to borrow quarterly up to 3 times the amount of their net lending to the euro area non-financial private sector, excluding loans to households for house purchases."

MORE ON PACKAGE OF MEASURES

"This package includes further reductions in the key ECB interest rates, targeted longer-term refinancing operations, preparatory work related to outright purchases of asset-backed securities and a prolongation of the fixed rate full allotment tender procedures. In addition, we have decided to suspend the weekly fine-tuning operation sterilizing liquidity injected under the securities market program."

ONGOING MODERATE ECONOMIC RECOVERY

Quarter-on-quarter in the second quarter of 0.2 percent "confirmed the ongoing gradual (economic) recovery ... The most recent survey results signal moderate growth also in the second quarter".

"...The risks surrounding growth prospects continue to be on the downside."

SWIFT ACTION IF NECESSARY

"If required, we will act swiftly with further monetary policy easing. The Governing Council is unanimous in its commitment to using also unconventional instruments within its mandate should it become necessary to further address risks of too prolonged a period of low inflation."

PACKAGE OF MEASURES

"We decided on a combination of measures ... to support lending to the real economy. This package includes further reductions in the key ECB interest rates, targeted longer-term refinancing operations, preparatory work related to outright purchases of asset-backed securities and a prolongation of the fixed-rate full allotment tender procedures."

FORWARD GUIDANCE

"Concerning our forward guidance, the key ECB interest rates will remain at present levels for an extended period of time in view of the current outlook for inflation."

(EMEA Editing Desk +44 207 542 4441)

http://www.globalpost.com/dispatch/news/thomson-reuters/140605/draghi-comments-at-ecb-news-conference