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Fri, 07 Feb, 2014 12:00:09 AM
FTimes- Xinhua Report, February 7
The Governing Council of the 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 percent, 0.75 percent and 0.00 percent respectively, said a statement by the ECB.
The annual inflation in the Euro area is expected to be 0.7 percent in January 2014, down from 0.8 percent in December 2013, according to a flash estimate from Eurostat, the statistics office of the European Union.
Some economists believe the low level of inflation may add to the pressure on the ECB to ease its monetary policy more.
The ECB's assessment of the inflation expectations has not changed much, according to what the ECB president Mario Draghi said in an introductory statement.
"As stated previously, we are now experiencing a prolonged period of low inflation, which will be followed by a gradual upward movement towards inflation rates below, but close to 2 percent later on," Draghi read out.
He added that the inflation rate seen in January is expected to remain so for months to come.
"Incoming information confirms that the moderate recovery of the euro area economy is proceeding in line with our previous assessment," Draghi said.
Commenting on the decision of the governing council, Draghi said the ECB decided to keep to interest rates on hold due to the complexity of the situation.
The ECB needs to acquire more information and further information and analysis will become available in early March, Draghi said.
Draghi reaffirmed that the ECB will maintain an accommodative stance of monetary policy for as along as necessary to assist the gradual economic recovery in the euro area.
"We continue to expect the key ECB interest rates to remain at present or lower levels for an extended period of time," he said.
According to Draghi, the ECB is monitoring developments with regard to recent money market volatility and its potential impact on the ECB's monetary policy stance closely and "are ready to consider all available instruments."
The governing council discussed all available instruments on a broad basis, without identifying what instruments will be employed.
Surveys suggested that the moderate recovery continued in the last quarter of 2013 and output in the euro area is expected to recover at a slow pace.
"The risks surrounding the economic outlook for the euro area continue to be on the downside," Draghi said.
He called on the euro area countries to continue consolidation efforts and put high government debt on a downward trajectory over the medium term. "Governments must therefore continue with product and labour market reforms."
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