FRANKFURT (Reuters) - Financial markets have calmed after initial concern about Italian elections and there has been little sign of worry spreading to other countries, European Central Bank President Mario Draghi said on Thursday.
He added that much of the fiscal consolidation being undertaken in Italy was continuing despite the post-election difficulties of forming a government.
“Markets after some excitement immediately after the elections have now reverted back, more or less, to what they were before,” Draghi said at a news conference after the ECB left the main refinancing rate at a record low of 0.75 percent.
“We have many signs that confidence (of) financial markets in the euro area is returning. If we look at contagion, you have seen certainly that the contagion to other countries has been muted this time, contrary to what might’ve happened about a year and a half ago. And this is another positive sign.”
The euro zone debt crisis has wrought havoc in peripheral euro zone economies for three years, and austerity-weary populations are increasingly demanding an end to budget-balancing measures, seen as worsening the crisis.
A dramatic anti-austerity vote at Italian elections has left slim prospects for a durable, reform-minded government in Rome.
Draghi was governor of the Bank of Italy from 2006 to October 2011, after which he became president of the ECB.
Reporting by Sakari Suoninen. Editing by Jeremy Gaunt.