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“The euro area economy continues to expand at a moderate but steady pace, despite the adverse effects of global economic and political uncertainty,” Draghi told European Parliament lawmakers in Brussels.
“This gradual upward trend is expected to continue, not least owing to our monetary policy measures.”
Draghi also warned that Britain’s economy would be the first to suffer if its exit from the European Union leads to protectionist economic measures.
“If, in the long run, the risk of a less-open UK economy in terms of trade, migration and foreign direct investment were to materialize, there would be a negative impact on innovation and competition and, thus, productivity and potential output,” Draghi said.
The ECB chief also warned of prolonged low interest rates which in turn facilitate heavy risks for financial markets.
Interest rates in the euro zone are currently below zero: The rate on the marginal lending facility remains at 0.25 per cent, and the deposit rate at minus 0.4 per cent.
This would mean that banks that hold money overnight at the central bank would have to pay for the service; it would, therefore, be in their benefit to encourage lending.
Last week, Draghi said that the current quantitative easing stimulus program should remain in place help inflation rise to its desired two per cent level.
“The monthly asset purchases of 80 billion euros are intended to run until the end of March 2017, or beyond, if necessary, and in any case until it sees a sustained adjustment in the path of inflation consistent with its inflation aim,” a previous ECB statement said.
The BRICS Post with inputs from Agencies