FRANKFURT (MNI) – European Central Bank President Mario Draghi on
Thursday said that the Governing Council’s decision to leave interest
rates unchanged and its entire discussion were unanimous.

The Council did not consider lowering the borrowing rate to
discourage banks from depositing funds at the central bank, he said.

Commenting on the rate decision, Draghi said that the ECB saw a
“weakening of economic activity in the euro area” and “significant
downside risks”.

Although there economic indicators show some signs that the economy
is stabilizing, it is “not possible to express a judgment of confidence”
because the “hard data don’t yet show this,” he said.

The ECB president said there was “a very high level of uncertainty”
in the economic outlook and noted that economic performance within the
Eurozone was increasingly varied.

“There is a lot of heterogeneity in the euro area,” said Draghi.
Some countries “live through this crisis with lower growth rates but no
recession,” but in other “you see an incoming recession.”

“So to give an average judgment of this very complex situation is
actually very difficult now,” he said.

With unemployment in the Eurozone now at 10.3%, “job creation is
first and foremost one of the main objectives of economic policy,” said
Draghi.

Data from the ECB appear to show that banks have on aggregate been
depositing almost as much money with the ECB as they have borrowed from
it, suggesting to some that the central bank’s efforts to get banks
lending again to the real economy have not been successful.

Draghi, however, said that the Council had not considered lowering
its borrowing rate to discourage such deposits, revealing that “by and
large the banks that have borrowed money from ECB are not the same as
the ones that are depositing money with the deposit facility.”

On the euro’s depreciation against the US dollar, the ECB president
reaffirmed the central bank’s commitment to market-determined exchange
rates. But he also reiterated the G7 stance that “disorderly movements”
could hurt economic stability and said that the ECB would cooperate with
other central banks where appropriate.

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