By Tom Fairless and Todd Buell 

FRANKFURT -- European Central Bank President Mario Draghi issued a fresh plea to eurozone governments on Monday to help out the ECB by enacting growth-boosting overhauls, underlining how central banks are moving closer to the limits of what their stimulus policies can achieve.

At a hearing in the European Parliament in Brussels, Mr. Draghi warned of adverse side effects of keeping interest rates low for too long, and said ECB action was "not enough for delivering real and sustainable growth in the long term."

"It's quite clear that other policies should complement [central-bank] action," Mr. Draghi said.

Years of massive stimulus policies by central banks from Frankfurt to Tokyo have yet to significantly lift inflation, raising concerns among investors over how much more central banks can do.

The ECB has ramped up its stimulus repeatedly in recent months, cutting interest rates further below zero and accelerating its monthly EUR80 billion ($90 billion) bond-purchase program, known as quantitative easing. But eurozone inflation is still close to zero, where it has hovered for two years, far below the ECB's target of just under 2%.

In Tokyo, the Bank of Japan, which has struggled for decades to bring about steady inflation, last week introduced a target for 10-year interest rates in its latest bid to restart economic growth.

Mr. Draghi stressed that the ECB's stimulus policies are working, and that the eurozone's economy so far has proven resilient to Britain's vote to leave the European Union in June. He said the ECB would continue to "do its part," by providing fresh stimulus if needed to support growth.

But Mr. Draghi also underlined the limits of central-bank action, which he said is "not without a cost." The ECB cut its deposit rate -- charged to banks for storing funds with the central bank -- to minus 0.4% in March.

"Very low rates for a very long time do have side effects that especially affect financial stability," Mr. Draghi said. "Negative rates aren't a matter of yes or no; it's a matter of extent and for how long."

The ECB recently set up a task force to examine different types of economic overhauls and their interaction with central-bank policies, Mr. Draghi added.

Luigi Speranza, an economist with BNP Paribas in London, said the comments indicated that further interest-rate cuts by the ECB were unlikely.

"The ECB's call for other policy makers to play their own part has become louder and clearer of late, reflecting an acknowledgment that monetary policy has its limitations but probably also some frustration that the burden of supporting the economy is largely left to the ECB alone," Mr. Speranza said.

Still, with inflation so low, most economists expect the ECB to boost its stimulus again soon, probably by extending its bond-purchase program before it ends in March. To do so, the central bank probably would need to tweak the design of the program, to ensure it doesn't run out of bonds to buy. ECB staff are re-examining the program's design.

Mr. Draghi gave no indication Monday as to how that review was progressing, or whether the ECB would extend QE. He stressed that some stimulus measures were still in the pipeline, notably two long-term loans for banks.

Mr. Draghi will travel to Berlin on Wednesday to address German lawmakers, his first such visit in four years, amid criticism of the ECB's policies in German political circles. In a preview of that debate -- which will take place behind closed doors -- some EU lawmakers representing German constituencies asked tough questions Monday about low interest rates and their impact on savers.

Mr. Draghi emphasized that low rates are a symptom of low economic growth, rather than simply the result of central-bank decisions.

"It's true that savers are being penalized by the current system. We're aware of that," he said. "But on the other side of the scale, whoever borrows money is benefiting from this."

He also repeated his call for consolidation in Europe's banking sector, which he warned suffers from overcapacity and inefficiency. Low returns in the sector, he said, are the result of weaknesses such as a large stock of nonperforming loans and high costs, rather than low interest rates.

"The ratios of costs to income [among European banks] are way above those of banks in other parts of the world," Mr. Draghi said.

Write to Tom Fairless at tom.fairless@wsj.com and Todd Buell at todd.buell@wsj.com

(END) Dow Jones Newswires

September 26, 2016 14:40 ET (18:40 GMT)