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ECB'S Draghi sees no urgent need to cut rates further

Saturday, 28 Dec 2013 | 9:10 AM ET
Mario Draghi, President of the European Central Bank
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Mario Draghi, President of the European Central Bank

European Central Bank President Mario Draghi sees no urgent need to cut the euro zone's main interest rate further and no signs of deflation, he said in an interview published on Saturday.

While the euro zone crisis has not yet been beaten, he added, there were many encouraging signs, including economic recoveries in some countries, easing trade imbalances and shrinking budget deficits.

"That is more than we would have expected last year," he told German news magazine Spiegel.

Asked about any further cuts to interest rates after the ECB cut its main refinancing rate to 0.25 percent in November, Draghi said: "at the moment we don't see a need for any urgent action." There could be "no talk of deflation" in the euro zone, he added.

Draghi expressed satisfaction that the fears and warnings of some German economists about his monetary policies had proved unfounded.

"There was this perverse fear that things would only get worse.... each time we heard, 'oh God this Italian is destroying Germany'". The very opposite has happened, Draghi said, noting inflation was low and uncertainty had eased.

Asked about the U.S. Federal Reserve's decision to start scaling back its bond-buying programme, Draghi said market reaction had been muted, showing markets were much more resilient than last year.


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