Draghi declares OMT victory in latest ECB rates announcement
The much publicised Outright Monetary Transactions programme announced by the ECB last month has already succeeded in reducing market fears of a complete eurozone meltdown, declared ECB president Mario Draghi today.
“Our decisions as regards Outright Monetary Transactions (OMTs) have helped to alleviate such tensions over the past few weeks, thereby reducing concerns about the materialisation of destructive scenarios,” Draghi said in a statement.
“It is now essential that governments continue to implement the necessary steps to reduce both fiscal and structural imbalances and proceed with financial sector restructuring measures.”
Draghi’s view was expressed at the same time that he said the bank would leave its key rates unchanged, in light of data suggesting eurozone inflation will remain above 2% throughout 2012.
However, the eurozone is also predicted to remain subject to weak growth, with no recovery predicted by the ECB in the near term. Europe is also facing ongoing problems accessing credit, as Draghi acknowledged today.
“To a large extent, subdued loan dynamics reflect the weak outlook for GDP, heightened risk aversion and the ongoing adjustment in the balance sheets of households and enterprises, all of which weigh on credit demand. At the same time, in a number of euro area countries, the segmentation of financial markets and capital constraints for banks restrict credit supply.”
The ECB’s current rates are:
Marginal lending facility 1.50 %
Main refinancing operations (fixed rate) 0.75 %
Deposit facility 0.00 %