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ECB’s Draghi: Rates to remain low for ‘extended period’

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European Central Bank president Mario Draghi says interest rates will stay low “for an extended period” after the Bank held rates at 0.05 per cent.

Draghi also warns rates are likely to stay low “for an extended period of time” in the face of low oil prices and economic ructions at the beginning of 2016.

However, Draghi says the Bank will “review and possibly reconsider our monetary policy in March, when new economic projections will become available”.

He adds: “In the meantime work will be carried out to ensure all the technical conditions are in place.”

In December, the overnight deposit rate was cut from -0.2 per cent to -0.3 per cent in an attempt to push banks to lend. This rate has been left unchanged.

Also in December, the ECB extended its monthly €60bn stimulus programme by six months to March 2017.

Draghi argues this decision was “fully appropriate”.

However, in a year so far characterised emerging market slowdown, geopolitical turmoil and market volatility, Draghi expects the path of inflation to stay weak.

He says: “The expected path in 2016 of inflation is significantly lower compared to the outlook in December. It’ll remain low or negative and pick up only later in 2016.”

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