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Draghi sees More Downside Risk for Europe Growth

Draghi sees more downside risk for Europe growth (by Barbara Kollmeyer)

MADRID (MarketWatch) -- European Central Bank President Mario Draghi on Thursday said further downside risks to euro-area growth have materialized and indications for the second quarter point to weakened growth and heightened uncertainty. Inflationary pressure has been dampened by the risks to growth, he said. The ECB on Thursday cut its benchmark lending rate by a quarter of a percentage point to a record-low 0.75% as expected. It also lowered the deposit and marginal lending-facility rates. "Beyond the short term, we expect the euro-area economy to recover gradually but see momentum dampened by number of factors," said Draghi at a press conference. Such factors include tensions in euro-area sovereign-debt markets and high unemployment, which will weigh on underlying growth momentum, he said. "Risks surrounding the euro area continue to be on the downside."

Draghi: Euro-area bank lending remains subdued (by Barbara Kollmeyer)

MADRID (MarketWatch) -- European Central Bank President Mario Draghi, at a press conference following the rate cut announced by the central bank Thursday, said loan growth in the euro area remains subdued. "To a large extent, subdued loan growth reflects the current cyclical situation, heightened risk aversion, and the ongoing adjustment in the balance sheets of householders and enterprises, which weigh on credit demand," he said. Looking ahead, Draghi said it's "essential for banks to continue to strengthen their resilience where it is needed." He added that the ECB welcomed decisions taken at the European Union summit last week to address financial-market tensions, restore confidence and revive growth. He also said the ECB welcomed the possibility of a single supervisory mechanism to recapitalize banks directly.

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ECB cuts refi rate to record low 0.75% *(XEU) *PIC*
Draghi sees More Downside Risk for Europe Growth