BREAKING NEWS
This content is not available in your region

ECB can delay rate hike again if needed: Draghi

ECB can delay rate hike again if needed: Draghi
FILE PHOTO: New European Central Bank (ECB) President Mario Draghi attends his first news conference in Frankfurt, November 3, 2011. REUTERS/Kai Pfaffenbach/File Photo   -   Copyright  Kai Pfaffenbach(Reuters)
Text size Aa Aa

FRANKFURT (Reuters) – The European Central Bank is willing to further delay a planned interest rate hike if necessary and may look at measures to mitigate any side effects of negative interest rates, ECB President Mario Draghi said on Wednesday.

Reversing course earlier this month amid an unexpected slowdown, the ECB has put plans to ‘normalise’ policy on hold, providing banks with even more liquidity and delaying a rate hike from record lows until next year.

“Just as we did at our March meeting, we would ensure that monetary policy continues to accompany the economy by adjusting our rate forward guidance to reflect the new inflation outlook,” Draghi told a conference in Frankfurt.

Draghi added that conditions for its new bank loan facility, called targeted longer-term refinancing operations or TLTRO, will also be calibrated to reflect evolving economic conditions.

Although Draghi said the economic soft patch does not necessarily foreshadow a serious slump, the euro area was now experiencing a more persistent deterioration of external demand, which seems to be dragging down investment.

Addressing complaints from banks that negative rates are hurting bank lending, Draghi said the ECB would look at whether mitigating measures are needed but said that negative weak profits are not an automatic result of low rates.

“If necessary, we need to reflect on possible measures that can preserve the favourable implications of negative rates for the economy, while mitigating the side effects, if any,” Draghi said. “That said, low bank profitability is not an inevitable consequence of negative rates.”

(Reporting by Balazs Koranyi and Francesco Canepa)

euronews provides breaking news articles from reuters as a service to its readers, but does not edit the articles it publishes. Articles appear on euronews.com for a limited time.