video Video

Draghi justifies Europe rate hold

Thursday, March 06, 2014 - 01:42

Mar 6 - The European Central Bank decides not to take any action because economic and monetary conditions have not changed enough to warrant it. Ciara Sutton reports,

▲ Hide Transcript

▶ View Transcript

Back on track and speeding forwards - thanks to the euro zone recovery Eurostar transported more than 10 million passengers last year, for the first time ever. Revenues also rose 7 percent year-on-year. There was further good news for France unemployment fell for the first time in two years. It all helped justify the European Central Bank's decision to keep rates unchanged. (SOUNDBITE) (English) ECB PRESIDENT, MARIO DRAGHI, SAYING: "You come here every time expecting action from us. And you're most likely disappointed every time we don't take action, even though we take action very often." Mario Draghi also backed away from further boosts to liquidity, despite forecasting low inflation for years to come. Currently 0.8% - it's been in what Draghi calls the "danger zone" for five months. Rabobank's Richard McGuire. (SOUNDBITE) (English) RICHARD MCGUIRE, HEAD OF INTEREST RATES STRATEGY AT RABOBANK, SAYING: "It's going in the right direction, it'll still be modestly below target at the end of 2016, which means the door is open to additional stimulus. But as he made clear during this particular meeting, there is no current momentum for the ECB to step through that very door." There are still plenty of potential banana skins to look out for - the biggest one - unemployment. (SOUNDBITE) (English) ECB PRESIDENT, MARIO DRAGHI, SAYING: "Although the unemployment in the euro area stabilizing. It remains high. And the balance sheet adjustments in the public and private sectors will continue to weigh on the pace of economic recovery." With rates already at a quarter of one per cent the ECB doesn't have much scope for further cuts. It's thought instead it might slowly start reclaiming the money it put into the system through government bonds For now though it's taking in the scenery well aware there's a long journey ahead.