At-risk governments like Italy and Spain have been helped by the “powerful impact” of the ECB pumping over €1 trillion (£838bn) into the financial system in December and February, he said, but they must push on with spending cuts and not become complacent over economic reforms.
The ECB held its main refinancing rate at one per cent, but said economic growth is expected to be between minus 0.5 per cent and 0.3 per cent in 2012, and between 0 per cent and 2.2 per cent in 2013, a slight downgrade on December’s forecasts.
Draghi also stressed that downside risks remain, including from a further intensification of the debt crisis.
However, he insisted he has no contingency plans for a Greece exit, claiming “to have a ‘Plan B’ is to admit defeat.”
Rising commodities prices have pushed up the ECB’s inflation expectations, and push prospects of further easing off the table.
It now predicts inflation will remain above its two per cent target for the whole of 2012.