Brussels, 07/03/2013 (Agence Europe) - In line with the European Commission. the European Central Bank (ECB) revised down its eurozone growth forecasts on Thursday 7 March 2013. At the monthly ECB press conference, the bank's president, Mario Draghi, said that the eurozone would see its GDP fall by between 0.9% and 0.1% in 2013, before returning to growth of between 0% and 2% in 2014. Given the weakness of the economy, inflation is expected to remain below the 2% mark in 2013 and 2014.
The ECB is keeping the key lending rate unchanged at 0.75% and says it will continue with its accommodating monetary policy as long as it takes, says Draghi. A further cut in interest rates was discussed by the Governing Council but has not yet been agreed upon.
The ECB is encouraging governments to continue with their economic reforms as the only way, it says, of returning to growth. That goes for Italy too, despite its worrying political uncertainty. Italian budget adjustment will continue on automatic pilot, said Draghi, seeing no particular reason for concern. The markets have returned to the level they were at before the Italian elections, he said, describing the danger of contagion as “moderate”. He pointed out that the OMT conditional bond buy-up programme was not specifically designed to make it easier for countries to return to the financial markets.
Along with the pursuit of economic reforms, the bank says that eurozone nations must actively tackle high unemployment, for which the bank itself has limited resources. The best contribution the ECB can make to job creation, said Draghi, is to continue to ensure price stability.
He was quizzed about the rumours that the bank was considering dropping its role in the troika of lenders (the European Commission, ECB and IMF) to various countries in the eurozone in receipt of financial aid. Ironically commenting on the way journalists needed to invent a “fear of the week” for every news conference, he advised them to ask the people involved before writing things that didn't exist. He said the troika worked perfectly well and the ECB provided value-added to it. The ECB's special responsibilities required it to remain a member of the troika and the rumours that began in German newspapers earlier in the week were based on the fact that the ECB fears that its involvement in the troika might damage its independence. The former governor of Bank of Italy said that the ECB's independence remained intact and the bank had never taken decisions under any type of political pressure. (EL/transl.fl)