FXstreet.com (Barcelona) - The ECB Governing Council decided to cut the main interest rate by 25 basis points to 0.75% at their July monetary policy meeting. During the subsequent press conference the ECB head Mario Draghi commented on the considerations underlying the decision.
The president suggested that inflation should decline further throughout the rest of 2012 and fall below 2% at the beginning of 2013, or even earlier. Elevated energy prices as well as increases in indirect taxes might exert upside pressure on inflation, but the risks are broadly balanced.
Various factors contribute to the renewed deceleration of growth in the Eurozone, such as high prices of energy, rising unemployment and instability on financial markets. As the entire EMU is experiencing the weakening of growth, the rate cuts have been “genuinely addressed to the whole area.”
Mario Draghi expressed his satisfaction with the outcome of last week's EU summit saying that the decisions made by EU officials will help tighten the economic and monetary union in the area. He welcomed the enabling of direct recapitalization of banks and assured that “the ECB is ready to serve as an agent to the EFSF/ESM in conducting market operations,” and will make full use of becoming banks supervising authority, although it will retain its independendce.
The president suggested that inflation should decline further throughout the rest of 2012 and fall below 2% at the beginning of 2013, or even earlier. Elevated energy prices as well as increases in indirect taxes might exert upside pressure on inflation, but the risks are broadly balanced.
Various factors contribute to the renewed deceleration of growth in the Eurozone, such as high prices of energy, rising unemployment and instability on financial markets. As the entire EMU is experiencing the weakening of growth, the rate cuts have been “genuinely addressed to the whole area.”
Mario Draghi expressed his satisfaction with the outcome of last week's EU summit saying that the decisions made by EU officials will help tighten the economic and monetary union in the area. He welcomed the enabling of direct recapitalization of banks and assured that “the ECB is ready to serve as an agent to the EFSF/ESM in conducting market operations,” and will make full use of becoming banks supervising authority, although it will retain its independendce.
