ECB defends low interest rates

The ECB said Thursday it would stick to its low interest rate policy for as long as was required, having opted to leave it at a record-low 0.5 percent during a boardroom meeting earlier this month.

Providing an outlook of economic developments in the eurozone in its latest monthly report, the central bank maintained low yields would go a long way towards fueling growth in the debt-stricken bloc. It said it expected that measure and low inflation in the area to result in higher domestic demand in member states.

The bloc also expressed optimism that inflation would remain low despite the rock-bottom rates.

"Against this overall background, the monetary policy stance will remain accommodative for as long as necessary," the ECB wrote in the introductory section of its monthly bulletin, published on Thursday.

The bank also predicted higher exports due to a recovery of the global economy. But it warned that there were still many risks with regard to a sustainable recovery of national economies, despite recent business climate barometers showing a clear upward trend.

Loans spread unevenly

The ECB said the cheap money it had been providing to lenders across the bloc was still failing to reach smaller companies and households on a sufficient scale. It said small and medium-sized firms particularly in Spain and Italy kept suffering from high yields on credits and loans.

Also on Thursday, top ECB official Jörg Asmussen once again rejected accusations that the central bank had exceeded its crisis-fighting powers with its bond-buying program.

Asmussen told German broadcaster rbb Inforadio the program made sense economically and had been very efficient. In addition, he said the scheme had been tied to strict savings measures by participants right from the start. The legitimacy of the program is currently being scrutinized by Germany's Constitutional Court in Karlsruhe.

hg/ccp (dpa, Reuters)