French President Francois Hollande and Mario Draghi the head of the European Central Bank (ECB) have agreed that European demand must be lifted to head off a risk of deflation, French officials said.
A German news magazine reported on Sunday that Chancellor Angela Merkel is unhappy with European Central Bank chief Mario Draghi for apparently proposing a greater emphasis on fiscal stimulus over austerity in order to boost growth in Europe.
The European Central Bank will consider the impact of future lawsuits and fines in its review of whether the Euro zone's 131 most important lenders have enough capital to withstand another recession.
European Central Bank President Mario Dragui signaled he was pleased with the recent decline in the Euro's exchange rate and outlined a number of forces that may weaken it further, providing a potential boost to weak inflation in the region.
European Central Bank president Mario Draghi reiterated on Thursday that he'll keep interest rates low as officials try to revive the region's economy with a new round of emergency measures.
The European Central Bank has introduced a raft of measures aimed at stimulating the Euro zone economy, including negative interest rates and cheap long-term loans to banks. It cut its deposit rate for banks from zero to -0.1%, to encourage banks to lend to businesses rather than hold on to money. The ECB also cut its benchmark interest rate to 0.15% from 0.25%.
The European Central Bank left interest rates at a record low at 0.25% on Thursday, but said it remained ready to act in the face of risks to the Euro zone economy, particularly turbulence in the emerging markets, and downplayed deflation.
The European Central Bank cut interest rates to a new record low on Thursday amid a chorus of calls for the Euro zone to focus on growth to end a nightmare of unemployment in the bloc. It was the first cut in ten months.
European Central Bank President Mario Draghi admitted on Thursday policy makers are concerned that the Euro strength will hamper their efforts to pull the economy out of recession and although the exchange rate is not a policy target, he confirmed “it is important for growth and price stability”.
French President François Hollande called on the Euro zone on Tuesday to develop an exchange rate policy to help protect the common currency from “irrational movements”. His comments came amid growing concern that the Euro, now trading around 1.35 to the US dollar, is too strong and could undermine the country’s exporters and hence wider economic growth.