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Eurozone economy needs ongoing stimulus: Draghi


MARIO Draghi warned that risks to the eurozone economy "remain on the downside" and require ongoing stimulus, as he chaired his final press conference as head of the European Central Bank (ECB) on Thursday.

"In particular, these risks pertain to the prolonged presence of uncertainties related to geopolitical factors, rising protectionism and vulnerabilities in emerging markets," Mr Draghi told reporters. "An ample degree of monetary policy accommodation is still necessary."

Mr Draghi last month reopened his monetary tool box to boost the flagging eurozone economy as the single currency bloc grapples with US-led trade conflicts and Brexit turmoil.

As well as cutting a key interest rate, he controversially restarted asset purchases to the tune of 20 billion euros (S$30.3 billion) a month begining in November, sparking rare public criticism from some fellow members on the ECB's governing council.

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At Thursday's meeting, the ECB kept its benchmark deposit rate unchanged at minus 0.5 per cent. It also reaffirmed that its open bond purchases will run "as long as necessary".

Mr Draghi said economic data since September's meeting had only confirmed "our previous assessment of a protracted weakness" in eurozone growth.

Last week, the International Monetary Fund (IMF) forecast eurozone growth of just 1.2 per cent this year and 1.4 per cent in 2020.

Mr Draghi, who after eight years is handing over the baton to ex-IMF chief Christine Lagarde, said the firepower he unleashed last month was "justified".

The package of measures would provide "substantial stimulus" to drive up growth and shore up stubbornly low inflation, he said. "The comprehensive package will contribute to a further easing in borrowing conditions for firms and households."

He stressed that the Governing Council continues to stand ready to adjust all of its instruments as appropriate to ensure that inflation moves towards its aim in a sustained manner in line with its commitment to symmetry."

On his tenure, he said that if there is one general thing he was proud of, it was the way he and the Governing Council had constantly pursued its mandate. "This is something we collectively should be very, very proud. In a sense, this is part of our legacy - never give up."

Ms Lagarde attended Thursday's governing council meeting as an observer but did not take part in the discussions, Mr Draghi added. The former French finance minister takes over on Nov 1.

"No advice is needed, she knows perfectly well what she has to do," said Mr Draghi, when asked what advice he would give his successor. AFP, REUTERS

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