6 Jun 2013
Draghi: ECB ready to introduce negative deposit rates
FXstreet.com (Barcelona) - The ECB Governing Council decided to keep the main interest rate unchanged at 0.5% in June after reducing it by 0.25% the previous month. During the subsequent press conference the ECB head Mario Draghi commented on the considerations underlying the decision.
The president suggested that inflation rates in the Eurozone would experience some volatility throughout 2013. He assured that the outlook for inflation remained “broadly balanced” in the medium term, indicating that upside CPI risks were connected with higher indirect taxes and commodity prices, while downside risks related to the weakness in the Eurozone economic activity.
Even though it is expected that economic activity should gradually recover in the second half of 2013, which view supported by recent improvements in economic data, various factors could still contribute to its deceleration, such as the slow implementation of structural reforms by Eurozone national governments as well as weak domestic demand. The central bank is prepared to support the demand through its monetary policy stance which will remain accomodative for as long as necessary.
Finally, he urged the EU Member States to carry on with structural reforms in order to stimulate competitiveness and employment and reduce deficits.
During the Q&A part of the press conference ECB president said that the Governing Council discussed various non-standard measures such as LTRO's and ABS. He also indicated that the central bank was technically ready to introduce negative deposit rates, but that it was not necessary yet.
The president suggested that inflation rates in the Eurozone would experience some volatility throughout 2013. He assured that the outlook for inflation remained “broadly balanced” in the medium term, indicating that upside CPI risks were connected with higher indirect taxes and commodity prices, while downside risks related to the weakness in the Eurozone economic activity.
Even though it is expected that economic activity should gradually recover in the second half of 2013, which view supported by recent improvements in economic data, various factors could still contribute to its deceleration, such as the slow implementation of structural reforms by Eurozone national governments as well as weak domestic demand. The central bank is prepared to support the demand through its monetary policy stance which will remain accomodative for as long as necessary.
Finally, he urged the EU Member States to carry on with structural reforms in order to stimulate competitiveness and employment and reduce deficits.
During the Q&A part of the press conference ECB president said that the Governing Council discussed various non-standard measures such as LTRO's and ABS. He also indicated that the central bank was technically ready to introduce negative deposit rates, but that it was not necessary yet.