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Citing signs of slow economic recovery on the continent, the European Central Bank announced Thursday that it would maintain its current monetary policy and not reduce interest rates further.
The ECB is keeping interest rates at 0.25 per cent, the lowest ever for the 18-member eurozone.
“Incoming information confirms that the moderate recovery of the euro area economy is proceeding in line with our previous assessment,” Mario Draghi, the ECB president, said in a news conference.
Draghi also addressed fears by some analysts that the eurozone could plummet into deflation just as it was trying to pull out of recession.
“Inflation expectations for the euro area over the medium to long term continue to be firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2 per cent,” he said.
He also said that the ECB was now forecasting GDP growth of 1.2 per cent in 2014, up slightly from the 1.1 per cent estimate made in December.
Last November, the European Union’s statistics office said that growth was sluggish at best, a pace the ECB has acknowledged.
“Looking ahead, the ongoing recovery is expected to proceed, albeit at a slow pace. In particular, some further improvements in domestic demand should materialize, supported by the accommodative monetary policy stance, improving financing conditions, and the progress made in fiscal consolidation and structural reform,” Draghi said in his report.
Overall growth in the zone registered at only 0.1 per cent for the third quarter, down from 0.3 per cent in the second quarter, but it has grown by 0.3 per cent in the past three months.
Unemployment in the eurozone continues to plague recovery efforts. While overall jobless figures for the zone are at an average of 12.2 per cent, it grew to 11.1 per cent in recession-prone France, and above 26 per cent in both Greece and Spain.