Draghi says ECB will keep interest rates low

ECB president Mario Draghi said eurozone interest rates would remain low for an “extended period”.

During the monthly news conference following the European Central Bank’s policy-setting meeting, President Mario Draghi (pictured) said the ECB kept its key refinancing rate at the record low of 0.5%. For the first time, it also gave some forward-looking guidance on where it expects interest rates to be in coming months.

“The Governing Council expects the key ECB interest rates to remain at present or lower levels for an extended period of time,” Draghi said.

Some experts have said the decision to provide guidance was meant to bring down borrowing rates in the open market and was a response to the US Federal Reserve hint at the end of QE.

However, Draghi denied the ECB was responding to decisions made by the Fed.

“We are not reacting to other central banks’ monetary policy decisions.”

Draghi also answered questions over Portugal’s crisis of last days, which threw European financial markets into a plunge, reigniting fears of another outbreak in the eurozone debt crisis.

“Portugal has achieved very remarkable results. It’s been a painful route and the results that have been achieved have been quite significant and remarkable, if not outstanding.”

The ECB is committed to keep the consumer price inflation rate at or near 2%. It was 1.6%in June, up from 1.4%in May. Draghi said inflation was unlikely to keep rising and pass the target.

“Underlying price pressures are expected to remain subdued over the medium term,” Draghi concluded.

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