Mario Draghi unveiled largely unchanged inflation forecasts for the eurozone even as its latest stimulus measures start to take effect, and called on governments to play a bigger role in cementing the region’s pickup.
“The economic recovery continues to be dampened by subdued prospects in emerging markets, the balance-sheet adjustments in a number of sectors, and sluggish implementation of structural reforms,” the European Central Bank president told reporters in Vienna, after the Governing Council kept its stimulus program unchanged.
“It is crucial to ensure that the very low inflation environment doesn’t become entrenched.”
The central bank said inflation will average 1.3% in 2017 and 1.6% in 2018, unchanged from its March outlook and short of its price-stability goal of just under 2%. The prediction for this year was increased to 0.2% from 0.1%, partly a consequence of a rebound in oil prices.
While this was the first time in a year that the ECB hasn’t cut its projections, the failure to lift them significantly is worrisome, as the previous forecasts didn’t incorporate the effect of an enlarged stimulus program. Vice President Vitor Constancio said only last week that he personally believed consumer-price growth in two years would exceed estimates.
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Draghi’s comments on the need for government action echo a rising chorus of officials and global economic policy advisers warning that central banks are becoming overburdened. The Organisation for Economic Cooperation and Development lambasted rich-world nations this week for failing to overhaul their economies. 
The International Monetary Fund has called for a three-pronged approach of loose monetary policy, fiscal action and structural reforms to sustain global growth. “Monetary policy is focused on maintaining price stability over the medium term and its accommodative stance supports economic activity,” Draghi said. “As emphasised repeatedly by the Governing Council, and as strongly echoed in both European and international policy discussions, in order to reap the full benefits from our monetary policy measures, other policy areas must contribute much more decisively, both at the national and at the European levels.”
The Governing Council earlier maintained its main refinancing rate at zero and the deposit rate at minus 0.4%. A corporate-bond purchase programme, part of quantitative easing and a sign that the central bank is being forced to reach into ever more assets as it tries to hit its mandate, will start on June 8.
Draghi confirmed that ECB will keep buying €80bn ($90bn) a month of assets under QE until at least March 2017. Most economists surveyed by Bloomberg say it will probably extend the programme past that date. A new programme of four-year loans to banks will begin on June 22.
“The Governing Council will closely monitor the evolution of outlook for price stability and, if warranted, will act by using all instruments available within our mandate,” Draghi said.