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European Central Bank keeps interest rates on hold

07 February 2013 19:23 (UTC +04:00)

Baku-APA. The European Central Bank (ECB) on Thursday kept interest rates unchanged and said the eurozone economy would gradually recover in the second half of 2013, APA reports.

ECB President Mario Draghi told a news conference after a governing council meeting that medium to longer-term inflation expectations for the euro area remained firmly anchored in line with expectations.

"Overall, this allows our monetary policy stance to remain accommodative," he said.

The ECB said economic weakness in the euro area would prevail in the early part of 2013, before gradually recovering later.

Draghi said the accommodative monetary policy stance of the ECB, the improvement in market confidence and a strengthening of global demand as positive developments.

He also called on euro area governments to further reduce fiscal and structural imbalances and to proceed with financial sector restructuring.

With regard to the repayment of the two three-year longer-term refinancing operations, Draghi confirmed that banks have repaid more than 140 billion euros (about 188 billion U.S. dollars) out of the 489.2 billion euros in the first operation conducted in December 2011.

"This reflects the improvement in financial market confidence," he said.

In response to a question about the recent appreciation of euro, Draghi said it was a sign of renewed confidence in the common currency.

However, Draghi added, "We will certainly want to see whether the appreciation, if sustained, will alter our risk assessment as far as price stability is concerned."

Draghi said the exchange rate is not an objective of the bank, reaffirming that the ECB's mandate is to maintain price stability. (1 euro = 1.34 U.S. dollars)