EUROZONE RATES HELD AT RECORD LOW AS FEARS OVER RECESSION GROW
ECB President Mario Draghi has said business has been held back by eurozone weakness
Wednesday April 4,2012
By Emily Fox for express.co.uk
THE Eurozone’s weak economy has stopped key businesses from making moves toward recovery, the chief of the European Central Bank said today.
Mario Draghi claimed that the weak eurozone economy had held businesses back despite the abundant cash made available from cheap loans.
The head of the ECB made his remarks after it held interest rates at a record low of 1pc as stock markets fell sharply following figures which suggested the eurozone was in recession and concerns grow about Spain.
The ECB resisted German pressure to flag an exit from its crisis-fighting mode.
Mr Draghi said that “the demand for credit remains weak in the light of subdued economic activity and downside risks to the economic outlook prevail.”
A batch of grim economic indicators and renewed concerns about the public finances in Spain – the euro zone’s fourth-largest economy – have fuelled worries that the euro zone is in recession and that the sovereign debt crisis may flare up again.
The ECB handed out 1 trillion euros in cheap, three year loans but Mr Draghi said the measures would “need time to unfold and to have a positive effect on growth when demand recovers.”
The eurozone economy shrank 0.3 percent in the fourth quarter and is struggling as governments cut budgets to reduce debt.
Draghi added that it was too early for the ECB to stop its eurozone debt crisis measures, he explained: “Any ‘exit strategy’ talking for the time being is premature.”
Tension in sovereign debt markets and high unemployment have also added to dampen growth.
Draghi sought to assuage German concerns, he said: “”All our non-standard policy measures are temporary in nature. All the necessary tools are available to address upside risks to medium-term price stability in a firm and timely manner.”