Following the hold of the European central Bank to the interest rate at its record low of 0.50 percent today, ECB President Mario Draghi delivered a speech to give an update the bank’s monetary policy and the economy.
Draghi confirmed that interest rate would remain at the current low level or even lower for an extended period of time, citing the weak euro area economy and “subdued monetary dynamics.”
He illustrated that recovery is expected to be “tentative” in the second half of 2013 as risks to economic outlook remains to the downside due to the presence of volatility in financial markets, weakness in domestic demand and sluggish progress in structural reforms.
Giving more details about the economy, he revealed that the labor market is still fragile and needs further reforms, the credit market is too fragmented which raises the need for accelerating the formation of banking union and governments should resume their determination to slash budget deficit while at the same time adopt policies that bolster growth.
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