ECB's Draghi says too early to declare victory in boosting prices

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[May 10, 2017]  By Balazs Koranyi

THE HAGUE (Reuters) - It is too early for the European Central Bank to declare victory in its quest to boost euro zone inflation despite signs that the bloc's economic recovery is strengthening, ECB President Mario Draghi said on Thursday.

European Central Bank (ECB) President Mario Draghi gives a speech after receiving the Gold Medal of the Jean Monnet Fondation for Europe in Lausanne, Switzerland May 4, 2017. REUTERS/Denis Balibouse

His comments confirm the ECB is in no rush to wind down his ultra-easy monetary policy of negative interest rates and aggressive bond purchases despite insistence from richer euro zone countries such as the Netherlands, where Draghi was speaking on Thursday, and Germany.

"Incoming data confirm that the cyclical recovery of the euro area economy is becoming increasingly solid and that downside risks have further diminished," he told a hearing of the Dutch parliament.

"Nevertheless, it is too early to declare success. Underlying inflation pressures continue to remain subdued and have yet to show a convincing upward trend."

The ECB is expected to tweak its policy message next month to reflect an improved economic situation but keep policy on hold.

Draghi said the benefits of the ECB's monetary policy were outweighing its side effects, but acknowledged rising property prices and high household debt in some countries, including the Netherlands.

"We do not currently see compelling evidence of overstretched asset valuations at the euro area level, but we do see that real estate dynamics or high household debt levels in some countries signal the risk of increasing imbalances," Draghi said.

"Such risks also exist in the Netherlands."

(Additional reporting by Andreas Framke in Frankfurt; Writing by Francesco Canepa; editing by Ken Ferris)

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