Mario Draghi says ECB stands ready to act after cutting eurozone growth estimates

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The European Central Bank stands to ready act should further signs of deterioration in the eurozone economy appear, its President Mario Draghi said shortly after the body cut its growth and inflation estimates for the region.

The ECB said growth in the euro area is now projected to be 1.4% in 2015, versus the 1.5% it forecast back in June, while inflation would be a mere 0.1% instead of 0.3%.

It also trimmed forecasts for 2016 and 2017 on both counts.

Draghi, speaking at a press conference following the Bank’s latest interest rate decision, said: “Downside risks have increased and emerging market economies’ challenges are unlikely to be quickly reversed,” he said.

“So lower commodity prices, a stronger euro, a somewhat lower growth, have increased the risk to a sustainable path of inflation towards 2%.”

Interest rates were unchanged, with the headline rate still at 0.05%.

Draghi pledged that the ECB’s Governing Council would “closely monitor” the situation and had already shown “willingness and ability to act if warranted”.

He said any such action could involve the Bank’s €1 trillion-plus quantitative easing programme, which “provides sufficient flexibility in terms of adjusting the size, composition and duration”.

The euro dipped to a two-week against the dollar of $1.115 following the comments.

Additional Reporting by Reuters

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September 3, 2015 |
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