Monday 23 April 2018

ECB’s Draghi hints at interest rate cut, warns of risks to eurozone

The eurozone economy faces serious risks and politicians must act fast, although the European Central Bank stands ready to provide further liquidity to solvent banks, ECB President Mario Draghi said on Friday.

No eurozone countries face an inflation risk, Mr Draghi added - just days after other ECB policymakers said the central bank might be open to cutting interest rates.

"There are serious downside risks here," he told the annual ECB Watchers conference in Frankfurt. "This risk has to do mostly with the heightened uncertainty."

Mr Draghi said the Eurosystem of euro zone central banks would "continue to supply liquidity to solvent banks where needed."

"The ECB has the crucial role of providing liquidity to sound bank counterparties in return for adequate collateral. This is what we have done throughout the crisis, faithful to our mandate of maintaining price stability over the medium term - and this is what we will continue to do," he added.

Keeping the onus on politicians to stop the crisis spiralling, he said: "We have reached a contingency where political choices have become predominant over monetary instruments that we can use in the near future."

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