European Central Bank President Mario Draghi said it was far too soon to talk about an exit from its massive emergency loans to banks, saying that any such move would be premature while the 17-country eurozone was struggling with slack economic conditions and record high levels of unemployment.
BRUSSELS: Greece, which may default on an International Monetary Fund debt repayment due on Tuesday after talks with creditors broke down, owes its official lenders 242.8 billion euros ($271 billion), according to a Reuters calculation based on official data, with Germany by far the largest creditor. That figure includes loans made under two bailouts from European governments and the IMF since 2010 -- worth a nominal 220 billion euros so far, of which some has been repaid -- as well as Greek government bonds held by the European Central Bank and national central banks in the euro zone.
Technically speaking, the European Central Bank did nothing at its monthly meeting last week. Despite plenty of discussion that May might finally have been the month for fresh monetary stimulus, policymakers not only left interest rates where they were, they also failed to offer up a quantitative easing program that many had hoped for. Instead, ECB President Mario Draghi did what he’s become quite expert at doing—he offered soothing assurances of preparedness.
ECB Denies it is Blackmailing GreeceYesterday, Mario Draghi Hit Back at QE Hawks and denied the ECB was blackmailing Greece. Critics of QE, such as Bundesbank president Jens Weidmann and the head of the Dutch central bank, Klaas Knot, argue the policy, which helps lower the cost of borrowing for member states, will allow countries such as France and Italy to shirk unpopular reforms.
The bank also lowered its benchmark interest rate to 0.50% from 0.75%, the first cut in 10 months.
Worries about eurozone persist, with data showing manufacturing activity across the 17-nation bloc shrank in April.
The ECB also extended its cheap loans to banks until at least July 2014, reports The BBC.
Official data released on Tuesday showed record high unemployment in the eurozone, and inflation at a three-year low.
FRANKFURT — The European Central Bank kept interest rates steady on Thursday and is likely to eschew dramatic action to help Italy or other eurozone countries, despite the threat of political turmoil in Rome reigniting the bloc’s debt crisis.
At its monthly policy meeting, the ECB held its main refinancing rate at a record-low 0.75%, in line with what the majority of economists in a Reuters poll had expected. The attention turns now to a 8:30 a.m. news conference, held by ECB President Mario Draghi, himself an Italian.
The Bank of England left its bond- buying program on hold today as Governor Mark Carney trains officials’ focus on providing forward guidance on policy to cement the economic recovery.
Armed with new quarterly economic forecasts, the nine- member Monetary Policy Committee held the target of its quantitative-easing program at 375 billion pounds (US$571 billion), as forecast by all but one of 42 economists in a Bloomberg News survey. It also kept the benchmark interest rate at 0.5%, a record low.
Get ready for record low interest rates in Europe as ECB ready to push boundaries of crisis role
A Reuters survey of 73 analysts showed a 60-percent chance the ECB will cut rates by 25 basis points to a record low of 1.0 percent -- a floor it previously reached during the financial crisis in 2009. It cut rates by a similar amount in November.