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ECB "ready to act" if euro zone doesn't recover

Thursday, April 04, 2013 - 02:34

April 4 - The European Central Bank expects a gradual economy later this year, but is ready to act if needed, said ECB President Mario Draghi as he kept interest rates on hold, as did the Bank of England. Draghi also said Cyprus' bailout was ''no template'' for the future. Joanna Partridge reports.

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It may not feel like it, but the European Central Bank expects the euro zone economy to recover gradually this year. The ECB has kept interest rates at a record low, but President Mario Draghi said it's "ready to act" - as it isn't certain the economy will pick up. SOUNDBITE: Mario Draghi, ECB President, saying (English): "In the coming weeks, we will monitor very closely all the incoming information on economic and monetary developments, and assess the impact on the outlook for price stability." During the global recovery from the financial crisis, the ECB has lent less support to its economy than its counterparts in the UK, US and Japan. On Thursday, Britain's Bank of England also kept interest rates on hold, and chose not to pump more money into the economy. But neither the ECB or BoE went as far as the Bank of Japan, which shocked markets by radically revamping its strategy. The ECB's unlikely to follow its lead, as the last thing the recession-hit euro zone needs is a stronger currency. It was the first ECB meeting since the euro zone crisis reappeared with a bang in Cyprus. On the island, bank workers held a walkout over fears about their pensions. The country's two largest lenders were hit with huge losses under the international bailout agreement. Draghi blamed Cyprus' government for initial market turmoil over the bailout. SOUNDBITE: Mario Draghi, ECB President, saying (English): "Cyprus is no template, Cyprus is no turning point in the euro policy. We, at the same time, have said many many times that our resolution, and I said the very same things when I was chairman of the FSB, we have to be able to resolve banks, without using taxpayers' money and without disrupting the payment system." That statement was intended to ease market fears that bank deposits could in future be fair game for international lenders. In Frankfurt, trader Robert Halver expected more. SOUNDBITE: Robert Halver, Head of market analysis at Baader Bank, saying (German): "Mr Draghi already made a promise last year that if necessary he would buy unlimited government bonds, to save the euro zone. He would do that in an extreme case, and he repeated this, but it's nothing new." As gloomy data continues to emerge from the euro zone, investors will be asking exactly what Draghi and the ECB are waiting for before they take action to end the crisis.