Excessively low inflation hurts consumers and damages the European Central Bank's credibility, Mario Draghi, the bank's president said on Monday, defending loose monetary policy and the bank's December rate cut.

"Meeting our objective is about credibility," Draghi told a business forum. "If a central bank sets an objective, it can't just move the goalposts when it misses it."

"Confidence comes from every party fulfilling its mandate. And that's what the ECB will do, as the Treaty demands of us," he added.

The ECB last week raised the prospect of further policy easing as soon as March as growth prospects fade and inflation remains stuck near zero, well short of the bank's near 2% target.