Reuters - Video

EDITION: U.S. | U.K. | IN

Business

ECB's Draghi abandons tradition

Thursday, Jul 04, 2013 - 01:47

July 4 - The European Central Bank announces that interest rates are to stay at a record low for an extended period or could even fall further. Rough Cut (no reporter narration).

▲ Hide Transcript

View Transcript

(ROUGH CUT - No reporter's narration) (SOUNDBITE) (English) EUROPEAN CENTRAL BANK PRESIDENT (ECB) MARIO DRAGHI SAYING: "The Governing Council took the unprecedented step to give forward guidance in a rather more specific way than it did ever in the past. It says the Governing Council expects the key - so all - interest rates to remain, the key ECB interest rates to remain at present or lower levels for an extended period of time." "Well, I said an extended period of time is an extended period of time. It's not 6 months, it's not 12 months, it's an extended period of time." "Underlying price pressures in the euro area are expected to remain subdued over the medium term. In keeping with this picture, monetary and in particular credit dynamics remain subdued. Inflation expectations for the euro area continue to be firmly anchored in line with our aim of maintaining inflation rates below but close to two percent over the medium term." "Overall, euro area economic activity should stabilise and recover in the course of the year, albeit at subdued pace. The risk surrounding the economic outlook for the euro area continues to be on the downside." "I think Portugal has achieved very remarkable results. Certainly, it's been a painful road and the results that have been achieved have been quite significant, remarkable, if not outstanding." The European Central Bank will keep interest rates at record lows for an extended period and could yet cut them further, the bank's chief, Mario Draghi, said on Thursday (July 4). Draghi made clear that 'an extended period of time' means exactly that and refused to specify the timeframe even further. He added that the council had discussed cutting rates but decided against and said the bank could also consider cutting the deposit rate on bank deposits at the ECB - already at zero - in an attempt to foster more lending. The ECB left its main refinancing rate at 0.5 percent and the deposit rate at zero, as was expected by economists in a Reuters poll. Central banks around the world are facing turbulent financial market conditions since the U.S. Federal Reserve last month set out a plan to exit from its money-printing programme. Whether forward guidance about policy can mitigate the impact of the Fed's move on other countries remains to be seen. An acceleration in euro zone inflation in June and stronger-than-expected consumer spending in France and Germany reinforce the ECB's projection for a slow euro zone recovery late this year, leaving it little grounds to justify a rate cut now. Draghi stuck with the bank's forecast that the euro zone economy would improve in the second half of the year but said the risks to that were skewed to the downside. His intervention represented a marked departure from the bank's June meeting when he doused expectations of any imminent policy action and also from the ECB's customary insistence that it never precommits on interest rate policy. The move also highlights the paucity of policy options open to the ECB at a time of renewed turmoil in the euro zone, referring specifically to Portugal. The bailed-out country's yields have been rising sharply following ministerial resignations that may force an election over continued budget austerity.

ECB's Draghi abandons tradition

Thursday, Jul 04, 2013 - 01:47

Top News »

Investing 201 »

Arian Foster = BlackBerry? Arian Foster = BlackBerry?

Fri, Oct 25, 2013 - (3:16)

Don’t miss these red flags for IPOs Don’t miss these red flags for IPOs

Thu, Oct 10, 2013 - (2:34)

Copycat currency trading Copycat currency trading

Wed, Oct 02, 2013 - (2:28)

When to dump a winner When to dump a winner

Tue, Sep 24, 2013 - (1:55)

Where gold might again attract Jim Rogers Where gold might again attract Jim Rogers

Thu, Sep 19, 2013 - (2:05)

Why savings interest rates won't budge Why savings interest rates won't budge

Fri, Sep 13, 2013 - (2:09)

Buy local? ETFs try the trend Buy local? ETFs try the trend

Thu, Sep 05, 2013 - (2:42)

The better bond funds The better bond funds

Wed, Aug 07, 2013 - (2:40)

Best bargain in 40 years? European stocks Best bargain in 40 years? European stocks

Thu, Aug 01, 2013 - (2:24)

Invest like an activist Invest like an activist

Fri, Jul 26, 2013 - (2:49)

Money Clip »

3 things to do before disaster strikes 3 things to do before disaster strikes

Wed, Sep 18, 2013 - (1:39)

Your must-do money list Your must-do money list

Wed, Sep 11, 2013 - (1:24)

The worst "best" financial advice The worst "best" financial advice

Wed, Sep 04, 2013 - (1:42)

Forget gold: The case for REITs Forget gold: The case for REITs

Fri, Apr 26, 2013 - (1:19)

3 rules for buying a house now 3 rules for buying a house now

Thu, Apr 18, 2013 - (1:39)

“Stalking” your dream home - Money Clip “Stalking” your dream home - Money Clip

Wed, Mar 27, 2013 - (2:50)

3 hidden tax deductions - Money Clip 3 hidden tax deductions - Money Clip

Thu, Mar 21, 2013 - (1:33)

Reuters Investigates »

Re-homing victim: "I could have been dead" Re-homing victim: "I could have been dead"

Wed, Feb 19, 2014 - (8:24)

Cops and loggers in the Amazon rainforest Cops and loggers in the Amazon rainforest

Fri, Jan 10, 2014 - (4:01)

"Passed around like a dog" "Passed around like a dog"

Thu, Aug 29, 2013 - (6:32)

Adopted, then abandoned online Adopted, then abandoned online

Thu, Aug 29, 2013 - (13:21)

How the DEA keeps its secrets secret How the DEA keeps its secrets secret

Mon, Aug 05, 2013 - (1:36)

How education lost its role as the great equalizer - Reuters Investigates How education lost its role as the great...

Mon, Dec 17, 2012 - (7:52)

Jihad Jane: From abused child to American jihadist - Reuters Investigates Jihad Jane: From abused child to American...

Sat, Dec 08, 2012 - (10:01)

Jihad Jane: The order to kill - Reuters Investigates Jihad Jane: The order to kill - Reuters...

Sun, Dec 09, 2012 - (10:39)

Moving Pictures »

Still missing – MH370 Still missing – MH370

Fri, Sep 05, 2014 - (2:05)

Images of August Images of August

Fri, Aug 29, 2014 - (1:00)

Burning Together Burning Together

Mon, Sep 01, 2014 - (2:23)

Mending dolls, teddies and hearts Mending dolls, teddies and hearts

Fri, Aug 22, 2014 - (3:12)

"Old timers" sail the Chesapeake Bay "Old timers" sail the Chesapeake Bay

Mon, Aug 11, 2014 - (2:27)

Burned memories Burned memories

Fri, Aug 08, 2014 - (3:02)

Images of July Images of July

Thu, Jul 31, 2014 - (1:20)

World Cup: passion on the pitch World Cup: passion on the pitch

Fri, Jul 11, 2014 - (1:00)

A refugee in America gives back A refugee in America gives back

Wed, Jul 02, 2014 - (3:25)

A long search for refuge A long search for refuge

Fri, Jun 20, 2014 - (3:04)