ECB keeps all options open to support recovery
The European Central Bank (ECB) on Wednesday left the door open for further ultra-cheap loans to European banks, saying it had an array of instruments at its disposal to support the nascent recovery.
The bank has already offered two rounds of funding under its long-term refinancing operations or LTROs which were credited with helping turn around the crisis in Europe.
"We view this recovery as weak, as fragile, as uneven," Mario Draghi, president of the central bank, said after the ECB left rates on hold at a record low of 0.5 percent. He repeated its earlier commitment to keeping rates at present or lower levels for an extended period of time.
"We are ready to use all available instruments including an LTRO to make sure that short-term money market rates development are in line with our medium-term assessment of price stability. We have a vast array of instruments to this extent and we exclude no option in order to address the needs as it is most appropriate," he told a press conference.
Unemployment in the euro area remained high, he warned, and the necessary balance sheet adjustments in the public and private sectors would continue to weigh on economic activity.
Concerns have also been raised that a stronger euro could weigh on the region's competitiveness. Since the ECB's last meeting, the U.S. Federal Reserve has surprised investors with a decision to delay the tapering of its asset purchase program, sending the single currency higher.
(Read more: Fed: No taper)
The ECB president would not be drawn on the impact of the move, but said that the bank was attentive to exchange rate developments. The euro exchange rate was important for growth and price stability, he said.
Meanwhile, the U.S. has been plunged into crisis with the first government shutdown in 17 years. The standoff between President Obama and Republican lawmakers over a spending bill has sent the dollar even lower against the dollar and will likely complicate efforts in the U.S. to raise the public debt ceiling later this month.
Draghi said he did not see the prospect of a U.S. default but warned that a long government shutdown would pose a risk to the global and U.S. recovery.
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