Saturday

2nd Dec 2023

ECB chief 'not enthusiastic' about eurozone growth

  • The ECB is still prepared to lower interest rates under 0.5 percent (Photo: Valentina Pop)

The European Central Bank (ECB) on Thursday (5 September) decided to keep its interest key interest unchanged, despite data showing the eurozone economy out of recession for the first time in 18 months.

It said the rate will stay at 0.5 percent and suggested it may lower it still in the coming months.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

"I am very, very cautious about the recovery, I can't share the enthusiasm. These shoots are still very, very green," ECB chief Mario Draghi said at the bank's monthly press conference in Frankfurt.

He mentioned statistics published one day earlier showing the eurozone economy is growing for the first time since mid-2011, albeit by a timid 0.3 percent in the second quarter compared to the first three months of 2013.

With oil prices expected to go up due to the Syrian crisis and with most euro-countries still struggling with deficit, debt and unemployment, the ECB will continue its low-rate policy "for an extended period of time," Draghi noted.

The ECB upgraded its projection for the eurozone economy this year, saying it will only shrink by 0.4 percent compared to a 0.6 contraction predicted in June.

Next year, the eurozone is expected to grow by one percent, compared to 1.1 percent projected three months ago.

Rules for bank test next month

Meanwhile, the ECB and national bank supervisors are working on a set of rules on what data to include in an in-depth review of the balance sheets and assets of eurozone's largest banks.

The test is a precondition for the ECB to take on supervision over these banks.

Draghi said the set of rules will be published by 15 October.

"This is very important for banks, because they want to know how this review will be carried out," he noted.

He added there will be "positive news in the coming days" about the ongoing negotiations with the European Parliament on the Single Supervisory Mechanism.

Eurozone economy still in troubled waters

The eurozone economy grew by a meagre 0.1 percent in the last three months, showing that optimism on recovery from the crisis may be premature.

Analysis

What are the big money debates at COP28 UN climate summit?

The most critical UN climate conference (COP28) ever will run from Thursday to mid-December — with talks on climate commitments and climate finance expected to determine the success of this year's summit.

Opinion

Dubai's COP28 — a view from the ground

Discussion of the biggest existential threat humanity has ever faced is barely mentioned on billboards or signage in Dubai — yet visitors are made aware quite quickly that t world rugby sevens tournament is imminent.

Latest News

  1. Israel's EU ambassador: 'No clean way to do this operation'
  2. Brussels denies having no 'concern' on Spain's amnesty law
  3. Dubai's COP28 — a view from the ground
  4. Germany moves to criminalise NGO search-and-rescue missions
  5. Israel recalls ambassador to Spain in new diplomatic spat
  6. Migrant return bill 'obstructed' as EU states mull new position
  7. Paris and Berlin key to including rape in gender-violence directive
  8. What are the big money debates at COP28 UN climate summit?

Stakeholders' Highlights

  1. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  2. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  3. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  4. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?
  5. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  6. UNOPSFostering health system resilience in fragile and conflict-affected countries

Join EUobserver

Support quality EU news

Join us