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Frankfurt - The European Central Bank said Wednesday that its ultra-easy money policies are working and has no plans to roll them back any time soon, while insisting it wants Greece to stay in the euro.
The ECB's decision-making "governing council wants Greece to say in the euro, but it should be a strong agreement," President Mario Draghi said.
He was speaking after the ECB held its key interest rates unchanged at their current record low levels, and said its raft of recent unconventional measures, such as a contested bond purchase programme, were gradually making themselves felt in the eurozone economy.
"The asset purchase programmes are proceeding well," Draghi said.
"Our monetary policy measures have contributed to a broad-based easing in financial conditions, a recovery in inflation expectations and more favourable borrowing conditions for firms and households," he insisted.
"The effects of these measures are working their way through to the economy and are contributing to economic growth, a reduction in economic slack, and money and credit expansion," Draghi said.
Because no policy announcements had been expected from the meeting, much of the attention of Draghi's regular news conference was focussed on Greece as Athens scrambles to reach a deal with its creditors ahead of a looming debt deadline on Friday.
Greek Prime Minister Alexis Tsipras was scheduled to meet EU Commission President Jean-Claude Juncker in Brussels later on Wednesday.
"I can't give you a real-time report on how the negotiations are going, also because I'm here in Frankfurt and the negotiations are not taking place here," he said.
"But also because they are actually in a state of flux. There is a general will and strong determination that in the end an agreement will be found," Draghi said.
Greece and its international creditors have exchanged proposals to reach a deal to unlock €7.2bn to help Athens make a critical repayment on Friday. But months of fractious talks have been deadlocked over creditors' insistence that Athens undertake greater reforms which Greece's anti-austerity government has refused to match.
There are fears that Greece could default, possibly setting off a chain reaction that could end with a messy exit from the eurozone.
Until a deal has been reached, the ECB said it cannot restore a key channel of liquidity to Greek banks in accepting Greek bonds as collateral for its refinancing operations.
"We are not there yet," he said.
Committed to QE
Draghi also said that the ECB was "really far" from considering phasing out its controversial bond purchase programme.
In March, the central bank embarked on a drive of so-called quantitative easing, or QE, buying up €1.14trn in assets - at a rate of €60bn per month - until September 2016.
The aim is to inject liquidity into the financial system and push up the eurozone's chronically low rate of inflation.
The programme was controversial, with critics arguing it took pressure off governments to get their economies and finances in order and was tantamount to printing money to pay off governments' debts.
Markets have been speculating the ECB might end the stimulus programme early as it has successfully brought the eurozone out of deflation.
Data released Tuesday showed that eurozone inflation picked up to 0.3% in May after having been negative or flat for several months.
The ECB for its part published its latest updated economic projections, which see eurozone growth reaching 1.5% in 2015, 1.9% in 2016 and 2.0% in 2017.
At the same time, area-wide inflation was projected to reach 0.3% in 2015, 1.5% in 2016 and 1.8% in 2017, back close to the level of two percent which the ECB believes is conducive to healthy economic growth.
"The core message (from the news conference) was that the ECB will stay the course, firmly committing to the full implementation of QE even as growth and inflation pick up," said Natixis economist Johannes Gareis.
Berenberg Bank economist Christian Schulz felt that Draghi even "sounded a cautious note on the forecasts, noting that external demand had developed less favourably than expected in recent months.
While that was not a concern yet and domestic demand is doing well, Draghi's dwelling on the slight loss of momentum highlights the ECB's commitment to QE," he concluded.
