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Financial markets have 'weathered' Brexit uncertainty | Financial markets have 'weathered' Brexit uncertainty |
(about 2 hours later) | |
Europe's financial markets have "weathered" the uncertainty caused by Britain's vote to leave the EU, according to the president of the European Central Bank (ECB). | Europe's financial markets have "weathered" the uncertainty caused by Britain's vote to leave the EU, according to the president of the European Central Bank (ECB). |
Mario Draghi said markets had displayed "courage and resilience". | Mario Draghi said markets had displayed "courage and resilience". |
In its first rate meeting since Brexit, the ECB voted to leave key interest rates unchanged. | In its first rate meeting since Brexit, the ECB voted to leave key interest rates unchanged. |
But Mr Draghi signalled the ECB was ready, willing and able to act to boost Europe's economy if needed. | But Mr Draghi signalled the ECB was ready, willing and able to act to boost Europe's economy if needed. |
The main interest rate has been held at 0% and the ECB said it expected rates to remain at record lows or fall to lower levels for an extended period of time. | The main interest rate has been held at 0% and the ECB said it expected rates to remain at record lows or fall to lower levels for an extended period of time. |
The bank deposit rate was also maintained at minus 0.4%. A negative rate means banks must pay the ECB to park their cash and is designed to encourage them to lend. | The bank deposit rate was also maintained at minus 0.4%. A negative rate means banks must pay the ECB to park their cash and is designed to encourage them to lend. |
The ECB's stimulus programme, where it buys €80bn of bonds a month, has also been left unchanged and will run until March 2017 and beyond "if necessary". | The ECB's stimulus programme, where it buys €80bn of bonds a month, has also been left unchanged and will run until March 2017 and beyond "if necessary". |
'Grain of caution' | 'Grain of caution' |
"Over the coming months when we have more information... we will be in a better position to reassess the underlying macroeconomic conditions," Mr Draghi added. | "Over the coming months when we have more information... we will be in a better position to reassess the underlying macroeconomic conditions," Mr Draghi added. |
"If warranted, to achieve its objective, the governing council will act by using all the instruments available in its mandate," he said. | "If warranted, to achieve its objective, the governing council will act by using all the instruments available in its mandate," he said. |
Prior to the vote to leave the EU, Mr Draghi had speculated that an exit could cut eurozone growth by between 0.2% and 0.5% over three years. The European Commission had predicted an impact of between 0.25% and 0.5%. | Prior to the vote to leave the EU, Mr Draghi had speculated that an exit could cut eurozone growth by between 0.2% and 0.5% over three years. The European Commission had predicted an impact of between 0.25% and 0.5%. |
However, on Thursday he said that the forecasts should be treated with a "grain of caution" because it will depend on negotiations between Britain and the EU and the outcome of those talks. | However, on Thursday he said that the forecasts should be treated with a "grain of caution" because it will depend on negotiations between Britain and the EU and the outcome of those talks. |
Mr Draghi said that he expected inflation expected to remain low in the coming months - it was 0.1% in June - before picking up later this year. | Mr Draghi said that he expected inflation expected to remain low in the coming months - it was 0.1% in June - before picking up later this year. |
Howard Archer, chief European and UK economist at IHS Global Insight, said: "The ECB seems relatively relaxed over the initial impact from Brexit and currently expects the eurozone economic recovery "to proceed at a moderate pace" led by domestic demand. | |
"However, the UK referendum result is seen as one factor meaning that the risks to the growth outlook are tilted to the downside." |