ECB holds rates, confirms no move for 'extended period'

Thu Aug 1, 2013 9:18am EDT
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By Sakari Suoninen

FRANKFURT (Reuters) - The European Central Bank left interest rates at a record low 0.5 percent on Thursday and affirmed that they will remain there for some while to come and could yet fall further.

ECB President Mario Draghi hinted that policy would not be tightened until well into next year at the earliest, although the central bank will give no time horizon for when rates might move.

"Our monetary policy stance ... provides support to a gradual recovery in economic activity in the remaining part of the year and in 2014," Draghi told a news conference.

"The Governing Council confirms that it expects the key ECB rates to remain at present or lower levels for an extended period of time," he said, affirming last month's first stab at giving forward guidance on rates.

That was unanimously supported by the 23-strong council, he said.

Stronger economic reports in the past few days support the ECB's expectations of a pick-up later this year, though the policy options are complicated by market responses to the U.S. Federal Reserve's plans to slow its stimulus program.

"Euro area economic activity should stabilize and recover at a slow pace. The risks surrounding the economic outlook for the euro area continue to be on the downside," Draghi said.

"Recent developments in global and financial market conditions and the related uncertainties may have the potential to negatively affect economic conditions."   Continued...

European Central Bank (ECB) President Mario Draghi takes part in the European Parliament's Economic and Monetary Affairs Committee in Brussels, July 8, 2013. REUTERS/Yves Herman