ECB relieved as contagion threat muted following Italian election
Source: Agencies |
March 8, 2013, Friday
|
Print Edition
Print Edition
MARKETS have settled quickly after Italy's fractured election result and any threat of contagion has been muted, the European Central Bank's chief said yesterday, suggesting it is in no rush to take any action.
Italians delivered a strong rejection of austerity measures at elections last week and left no party grouping with enough support to form a durable government, raising the prospect of backsliding on economic reforms and debt-cutting measures.
"Markets after some excitement immediately after the elections have now reverted back, more or less, to what they were before," Draghi told a news conference after the ECB held interest rates at a record low 0.75 percent.
"You have seen certainly that the contagion to other countries has been muted this time, contrary to what might have happened about a year and a half ago. And this is another positive sign," he said.
The ECB has calmed the eurozone crisis with its pledge to buy government bonds in potentially unlimited amounts but it will only do so if a member country seeks helps from the bloc's rescue fund and agrees to austerity policy conditions.
The program, dubbed Outright Monetary Transactions, is yet to be deployed, and Italy could find itself outside the ECB's umbrella if it cannot form a government ready to adhere to its rules.
"OMT remains, is in place," Draghi said. "It is a very effective backstop, and it is there. But you know the rules."
A Reuters poll of economists showed uncertainty stemming from Italy's election makes it more likely the ECB will have to help struggling countries by buying their bonds at some point but with Spain, not Italy, the most likely recipient.
Although the decision to keep rates on hold met analysts' expectations, a growing minority of respondents - 22 of 76 expect that, eventually, the ECB will cut its main refinancing to a new record low of 0.5 percent.
New forecasts by ECB cut its forecast for the currency bloc in 2013. Gross domestic product may fall by between 0.1 and 0.9 percent this year, below a previous range of -0.9 to +0.3 percent.
Italians delivered a strong rejection of austerity measures at elections last week and left no party grouping with enough support to form a durable government, raising the prospect of backsliding on economic reforms and debt-cutting measures.
"Markets after some excitement immediately after the elections have now reverted back, more or less, to what they were before," Draghi told a news conference after the ECB held interest rates at a record low 0.75 percent.
"You have seen certainly that the contagion to other countries has been muted this time, contrary to what might have happened about a year and a half ago. And this is another positive sign," he said.
The ECB has calmed the eurozone crisis with its pledge to buy government bonds in potentially unlimited amounts but it will only do so if a member country seeks helps from the bloc's rescue fund and agrees to austerity policy conditions.
The program, dubbed Outright Monetary Transactions, is yet to be deployed, and Italy could find itself outside the ECB's umbrella if it cannot form a government ready to adhere to its rules.
"OMT remains, is in place," Draghi said. "It is a very effective backstop, and it is there. But you know the rules."
A Reuters poll of economists showed uncertainty stemming from Italy's election makes it more likely the ECB will have to help struggling countries by buying their bonds at some point but with Spain, not Italy, the most likely recipient.
Although the decision to keep rates on hold met analysts' expectations, a growing minority of respondents - 22 of 76 expect that, eventually, the ECB will cut its main refinancing to a new record low of 0.5 percent.
New forecasts by ECB cut its forecast for the currency bloc in 2013. Gross domestic product may fall by between 0.1 and 0.9 percent this year, below a previous range of -0.9 to +0.3 percent.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
