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No action from central banks despite weak growth
by Chris Marshall on Mar 07, 2013 at 13:47
He added that economic growth in the eurozone should gradually recover 'later in 2013' but that the ECB's governing council 'continues to see downside risks surrounding the economic outlook for the euro area'.
The euro, which had been up ahead of Draghi's comments, continued to rally, up 0.86% to $1.3078.
'Draghi elegantly balanced between dovish and hawkish comments, keeping all options open,' said ING economist Carsten Bzeski. 'In our view, rates should remain on hold unless the economic recovery fails to materialise in the coming months.'
Euro fears remain
Draghi's comments come as fears grow that last year's 'OMT', a plan to buy bonds in secondary markets should a eurozone country meet strict requirements to activate the scheme, might not provide a sufficient backstop should conditions in the currency bloc deteriorate.
Pier Luigi Bersani's centre-left party's failure to win the Italian elections outright has been seen as a vote against austerity that could de-rail the healing of the eurozone. 'Markets after some excitement after the election have now reverted back more or less to whether they are before. I think markets understand that we live in democracies' said Draghi.
Nonetheless, eurozone break-up risk is back in focus. 'I'm still pretty skeptical about the fundamentals that support the long term existence of the single currency,' said Charles Davis, head of macroeconomics at the Centre for Economic and Business Research at a debate on the future of the euro in London today.
Equity markets were little moved after the ECB and BoE decisions, with Britain’s FTSE 100 remaining higher on the day, up 0.35% to 6,450.
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