- Mario Draghi, European Central Bank Governor
Christmas did not come early this year, as the European Central Bank refrained from any bold measures or hints, keeping its interest rates at all-time low of 0.05%. The ECB Governor Mario Draghi said that the governing council will assess early next year whether its current measures are sufficient to bring consumer prices toward its official goal of below but close to 2%, and noted the sharp drops in oil prices may make that objective more difficult to achieve. Outlining new, lower economic growth and inflation outlook over the coming two years, Draghi stressed that in case the council decide its policies are not enough to end a period of disinflation, that would "imply altering the size, pace and composition of our measures."
Since June, the ECB has slashed interest rates twice, offered cheap loans to banks to boost lending and began purchase programmes for covered bonds and asset-backed securities. With the Euro zone's inflation well below the ECB's target, Draghi warned of a deflationary spiral of declining prices and households postponing spending. The ECB now expects the 18-nation economy to grow 0.8% this year, 1% in 2015 and 1.5% in 2016. It projects consumer prices will rise 0.5% in 2014, 0.7% next year and 1.3% in 2016. Draghi highlighted downside risks from falling oil prices on inflationary pressures within the Euro zone.
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