Euro rate stays at 0.5 per cent
ECB sticks with record low interest rate to support prospects of economic recovery from lengthy recession later in the year
The European Central Bank kept its main interest rate on hold at a record low 0.5 per cent yesterday, saying that improved economic data in May confirmed its forecast of a gradual recovery from prolonged recession later this year.
The bank's president, Mario Draghi, told a news conference that the bank's easy monetary policy "should continue to support prospects for an economic recovery later in the year" and it would remain "accommodative" for as long as necessary.
He said the bank was still looking at ways to boost lending to small and medium-sized enterprises and revitalising the market for asset-backed securities but any action was "not for the short term".
The ECB slightly lowered its economic outlook for the euro area this year, saying output would decline by 0.6 per cent in 2013 but grow by 1.1 per cent next year. ECB staff forecast inflation of 1.4 per cent this year and 1.3 per cent in 2014, below the bank's target of under but close to 2 per cent.
Draghi said the rate-setting governing council discussed at its monthly meeting the possibility of cutting the rate at which banks deposit money with the central bank to below zero.
The ECB was technically ready to do so, but would keep this and other unconventional options "on the shelf" for now, he said.
Asked if the decision was unanimous, Draghi said there was a consensus that "there wasn't any direction change that would grant immediate action".
