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ECB's Draghi says growth has moderated, outlook solid
[FRANKFURT] Economic growth in the euro zone has moderated but is expected to remain solid, while external threats including protectionism have become more prominent, ECB President Mario Draghi said on Thursday.
"Economic indicators suggest some moderation in the pace of growth since the start of the year," Mr Draghi said at a news conference after ECB rate-setters left policy on hold.
The ECB upheld its massive support to the eurozone, avoiding rocking the boat as storm clouds gather on the economic horizon. The Frankfurt institution kept its main refinancing rate at zero per cent, the rate on the marginal lending facility at 0.25 per cent, and on deposits at -0.4 percent, meaning banks pay to park money with the ECB. Governors also decided to continue buying 30 billion euros ($36.5 billion) of government and corporate bonds per month under the "quantitative easing" (QE) stimulus programme.
"This moderation may in part reflect a fall back from the high pace of growth observed at the end of last year, while temporary factors may also be at work." Recent economic data in the euro zone has pointed to a slowdown in the bloc's brisk economic expansion. ECB rate-setters have so far remained sanguine but investors have pushed back their expectations for an ECB rate hike.
Mr Draghi said risks surrounding the euro area growth outlook remained broadly balanced but that "risks related to global factors, including the threat of increased protectionism, have become more prominent".
The ECB is expected to wind down its 2.55 trillion euro(S$4.11 trillion) bond-buying programme by the end of this year and raise its policy rate for the first time since 2011 towards the middle of next year.