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ECB plays waiting game

March 7, 2013

The European Central Bank (ECB) has seen no reason to change its benchmark financing rate which already stands at a historic low. It said inflation would be kept at bay in the eurozone amid mediocre growth rates.

https://p.dw.com/p/17t02
Mario Draghi, President of the European Central Bank (ECB) , addresses the media during his monthly news conference in Frankfurt, March 7, 2013. Draghi announced that the ECB leaves the interest rates unchanged. REUTERS/Kai Pfaffenbach (GERMANY - Tags: BUSINESS)
Image: REUTERS

The European Central Bank (ECB) announced Thursday it would keep its main financing rate on hold at the historic low of 0.75 percent despite fresh political and economic uncertainties after an inconclusive election in Italy.

The ECB's announcement followed the decision on the same day by two other of the world's leading central banks to leave their monetary policies unchanged for the time being, with the Bank of England and the Bank of Japan also indicating there was no reason deviate from a proven course.

But recent developments in the 17-member euro area prompted ECB President Mario Draghi to make some adjustments in his new outlook for the bloc for this year and beyond.

Record unemployment in the Eurozone

Inflation under control

He said the ECB expected the eurozone's gross domestic product (GDP) to decline by between 0.9 and 0.1 percent in the current year. Draghi remained vague about economic prospects for 2013, foreseeing anything between 0 and 2-percent growth in the bloc.

"A gradual recovery should commence only in the second part of 2013," Draghi told a regular news conference after Thursday's board meeting in Frankfurt.

The president added consumer prices were not one of his main worries in the months and years ahead. "Inflation expectations for the euro area remain firmly anchored in line with our aim of maintaining rates below, but close to 2 percent over the medium term," Draghi commented. "Overall, this will allow our monetary policy stance to remain accommodative."

hg/hc (dpa, AFP)