Draghi: EU fiscal consolidation still needed

European Central Bank chief Mario Draghi said on Monday that tough budget reform "was and still is unavoidable" in crisis-hit eurozone countries such as Portugal. "Portugal is just one of the examples where the economic situation remains stressed and social distress is indeed very high," he told a hearing of the European Parliament's economic and monetary affairs commission. He also said that high youth unemployment was "a tragedy". Draghi said: "What the ECB has done is basically to say: Look, don't unravel the progress that these countries, and Portugal especially, have achieved on fiscal consolidation. "But make this fiscal consolidation growth-friendly -- lower your taxes, lower your current expenditures, make structural reforms." The ECB chief added, in comments streamed online: "We know that fiscal consolidation was and still is unavoidable. "If fiscal consolidation were to be unravelled ... we know what the market reaction would be, we know interest rates would go up." The ECB last week held its key rate steady at 0.50 percent for a third month in a row, and Draghi in an unusual move telegraphed sustained low rates by saying that "monetary policy will remain accommodative for as long as necessary".