ECB Monetary Policy Will Remain Accommodative
Baku, April 5(AZERTAC). The European Central Bank sat on its hands again Thursday, leaving its official interest rates unchanged and also refraining from any new unorthodox measures to stimulate a shrinking euro-zone economy.
In opening remarks at his regular press conference following its policy-setting meeting, President Mario Draghi gave no clear indication that the ECB Governing Council's assessment of the economic outlook had changed, or that the bank had edged closer to taking further action.
He did, however, repeat his familiar position that the bank's policy will remain "accommodative for as long as necessary" to generate a recovery.
And in answers to opening questions, Mr. Draghi acknowledged that inflation is now "well below"target and that the economic slowdown has spread to countries that had not, to date, been victims of financial market tensions.
But although he noted that the risks to the economy are still biased to the downside, he said that a recovery should take hold "later in 2013", and that risks to the price outlook are still broadly balanced.
Pressure on the ECB to act to support the economy has increased in recent weeks, with unemployment rising to a new record of 12% in February and annual inflation falling to 1.7% in March.
On top of that, the euro's exchange rate is again under pressure against some of the bloc's biggest trading partners, putting euro-zone exporters at a disadvantage in global markets vis-a-vis their Japanese competitors. The euro rose nearly 3% overnight in reaction to a radical easing monetary policy by the Bank of Japan.
However, the currency fell to a four-month low of $1.2750 against the dollar on the element of forward guidance contained in Mr. Draghi's opening remarks. Short-term interest rate futures rose. Both movements reflect expectations of a looser policy than previously thought.
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