On February 6, Governing Council of European Central Bank (ECB) decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.25%, 0.75% and 0.00% respectively. After the meeting, the President of the ECB, Mario Draghi, made explanations at the press conference. During the conference, Draghi emphasized the following highlights:
- The moderate recovery of the euro area economy is proceeding in line with ECB’s previous assessment.
- Inflation expectations for the euro area over the medium to long term continue to be firmly anchored in line with ECB’s aim of maintaining inflation rates below, but close to, 2%. Regarding the medium-term outlook for prices and growth, further information and analysis will become available in early March.
- ECB continue to expect the key ECB interest rates to remain at present or lower levels for an extended period of time.
- Developments in recent data and surveys overall suggest that the moderate recovery continued in the last quarter of 2013.
- Output in the euro area is expected to recover at a slow pace. Economic activity is also expected to benefit from a gradual strengthening of demand for euro area exports.
- Although unemployment in the euro area is stabilising, it remains high, and the necessary balance sheet adjustments in the public and the private sector will continue to weigh on the pace of the economic recovery.
- Developments in global money and financial market conditions and related uncertainties, mostly in emerging market economies, may have the potential to negatively affect economic conditions. Other downside risks include weaker than expected domestic demand and export growth and slow or insufficient implementation of structural reforms in euro area countries.
- Euro area countries should not unravel past consolidation efforts and should put high government debt on a downward trajectory over the medium term. Fiscal strategies should be in line with the Stability and Growth Pact and should ensure a growth-friendly composition of consolidation which combines improving the quality and efficiency of public services with minimising distortionary effects of taxation. When accompanied by the decisive implementation of structural reforms, these strategies will further support the still fragile economic recovery. Governments must therefore continue with product and labour market reforms. These reforms will help to enhance the euro area’s growth potential and reduce the high unemployment rates in many countries.
You can reach Draghi’s press conference details from the following link: