Financial News

  • 26 August 2014, 10:20

Draghi: ECB Ready To Spur On Euro Economy

The boss of the European Central Bank (ECB) has revealed it is ready to do more to boost a shaky recovery in Europe.

But Mario Draghi warned EU member governments they must still join in efforts to reduce unemployment, which remains stubbornly high.

Mr Draghi said: "I am confident that the package of measures we announced in June will indeed provide the intended boost to demand, and we stand ready to adjust our policy stance further."

So far the ECB has cut interest rates, offered cheap loans to banks and is weighing up asset purchases to help stimulate the 18-member eurozone.

The ECB has already pumped unprecedented amounts of liquidity into the banking system back in 2011 and 2012, but instead of lending the money on to businesses banks tended to park the cash with the ECB instead.

In June, the ECB created a negative interest rate to encourage banks to lend more.

Mr Draghi also said certain longstanding practices in some countries are helping to keep unemployment high.

He said freer wage adjustments and workforce levels would encourage companies to hire.

Mr Draghi made the comments as part of his speech at the US Federal Reserve conference in Jackson Hole, Wyoming.

Meanwhile, US shares eased on Friday after the Jackson Hole speech by Fed boss Janet Yellen left investors unsure on the possibility of a rate rise in coming months.

She said the financial crash complicated the Fed's ability to assess the US job market and made it harder to determine when to adjust interest rates.

Ms Yellen's remarks failed to offer strong signs that indicate she is moving away from the view of support through ultra-low interest rates.

The timing of a Fed rate increase remains unclear, though many economists foresee an increase by mid-2015.

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