Brussels, 02/10/2013 (Agence Europe) - In Paris on Wednesday 2 October, the European Central Bank Governing Council decided to leave interest rates unchanged for the main refinancing operations, the marginal loan facility and the deposit facility (0.5%, 1% and 0% respectively). The ECB president, Mario Draghi, said that the Governing Council had discussed cutting interest rates, but some felt that the green shoots of recovery did not justify this.
Mario Draghi's comments were very similar to those he made last month, stressing that the ECB's monetary policy would be accommodating for as long as was necessary to help underscore recovery, which he said was “weak, fragile and uneven,” and was expected to remain slow over the next few months, hit by high unemployment and consolidation of public finances by the member states. If necessary, the ECB is prepared to act in a manner tailored to needs and all options were open. The long-term lending to banks (LTRO) is one way the ECB could ensure that rates on the money markets remained in line with its medium-term forecasts, he said. Although the economy is slow to pick up, Draghi sang the praises of the euro, pointing out when questioned about political developments in Italy, that the political instability of one country, although damaging for the country itself, did not damage the eurozone. “The euro is more resilient than a few years ago,” he said due to reforms in the member states, the ECB's OMT bond purchase scheme and stronger economic governance in the eurozone.
Draghi said that the bank stress tests shortly to be organised by the ECB in cooperation with national competent authorities and private sector players would be “transparent and vigorous,” and would detect fault lines in bank balance sheets. If any under-capitalisation is detected, Draghi said that the European Commission, represented by Olli Rehn, had basically said that “since capital injection will be regarded as a one-off measure, it will not be counted as excess deficit” when calculating countries' excess deficits. (EL/transl.fl)