ECB's Draghi sees recovery signs, as rates held at 0.5%

Mario Draghi says the ECB's key interest rate are expected to remain low for an extended period

Related Stories

European Central Bank (ECB) president Mario Draghi has said there are some tentative signs of an economic recovery in the eurozone.

He said there may be "gradual recovery in economic activity in the remaining part of the year and in 2014".

It comes as the ECB once again kept interest rates at a historic low level of 0.5%.

And Mr Draghi has again said rates will remain at low levels for the foreseeable future.

"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.

His statement that rates would stay low is aimed at reassuring markets that the ECB is not ready to follow the US Federal Reserve towards withdrawing or "tapering" emergency stimulus.

Manufacturing

The rate decision comes after some positive indicators this week, including a slight drop earlier in the number of people unemployed in the eurozone.

It was the first fall for some 25 months, although the jobless rate remains at 12.1%.

And on Friday, it was revealed that eurozone manufacturing activity grew for the first time in two years in July as factory output increased.

Markit's Eurozone Manufacturing PMI rose to 50.3, from June's 48.8, breaching the 50 threshold for growth for the first time since July 2011.

Inflation in the currency bloc remains steady at 1.6%, below the ECB's goal of 2%.

'Weaker demand'

Mr Mr Draghi said there were still some challenges ahead, as he warned that eurozone countries should not end efforts to reduce government budget deficits.

"The risks surrounding the economic outlook for the euro area continue to be on the downside," he said. "Recent developments in global and financial market conditions and the related uncertainties may have the potential to negatively affect economic conditions.

"Other downside risks include the possibility of weaker-than-expected domestic and global demand and insufficient implementation of structural reforms in euro area countries."

The euro dropped to an intra-day low of $1.3196 after his remarks before moving to $1.3217, down 0.6% on the day.

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

Features & Analysis

  • Stained glass of man with swordFrance 1 England 0

    The most important battle you have probably never heard of


  • Golden retriever10 things

    Dogs get jealous, and nine more nuggets from the week's news


  • Pro-Israel demonstrators shout slogans while protesting in Berlin - 25 July 2014Holocaust guilt

    Gaza conflict leaves Germans confused over who to support


  • The emir of Kuwait Sheikh Sabah al-Ahmad al-Jaber al-SabahFreedoms fear

    Growing concern for rights as Kuwait revokes citizenships


From BBC Capital

Programmes

  • Leader of Hamas Khaled MeshaalHARDtalk Watch

    BBC exclusive: Hamas leader on the eagerness to end bloodshed in Gaza

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.