Wednesday 26 November 2014

Ukraine threatens Europe's recovery - Draghi

Jeff Black and 
Alessandro Speciale

Published 08/08/2014 | 02:30

European Central Bank (ECB) President Mario Draghi speaks during the bank's monthly news conference in Frankfurt August 7, 2014. The European Central Bank left interest rates unchanged on Thursday, holding off fresh policy action as it prepares to launch fresh funding for banks next month that it hopes will lift inflation from rock-bottom levels.    REUTERS/Ralph Orlowski
Mario Draghi
ECB chief Mario Draghi

The president of the European Central Bank (ECB), Mario Draghi, said the risks to Europe's recovery from conflicts including the Ukraine are increasing.

"Heightened geopolitical risks, as well as developments in emerging-market economies and global financial markets, may have the potential to affect economic conditions negatively," Mr Draghi, pictured above, said in Frankfurt after the ECB kept its main interest rates unchanged. "We are strongly determined to safeguard the firm anchoring of inflation expectations over the medium to long term," he said.

Stand-off

Headwinds facing the recovery in the 18-nation euro area are intensifying after Italy slipped back into recession and the stand-off between Russia and the US and its allies escalated into the worst such conflict since the Cold War.

Mr Draghi has said in the past that an external shock to the economy that endangers the inflation outlook could be a trigger for broad-based asset purchases or quantitative easing.

"The governing council is unanimous in its commitment to use unconventional policy measures like ABS purchases, like QE, if our medium-term outlook for inflation were to change," Mr Draghi said. "We will closely monitor the possible repercussions of heightened geopolitical risks and exchange-rate developments."

Irish Independent

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