ECB leaves monetary policy intact

Oct. 4, 2012 at 3:32 PM   |   Comments

FRANKFURT, Germany, Oct. 4 (UPI) -- The European Central Bank left its interest rates unchanged Thursday on the prediction that the economy would remain weak and inflation above the target rate.

"Owing to high energy prices and increases in indirect taxes in some euro area countries, inflation rates are expected to remain above 2 percent in 2012," ECB President Mario Draghi said during a news conference.

Draghi acknowledged that the central bank's bond-buying program announced in September has "helped alleviate ... tensions over the past few weeks, thereby reducing concerns about the materialism of destructive scenarios."

However, he said, economic growth "is expected to remain weak" in the 17-nation currency region that uses the euro.

Draghi said the bank was also "ready" to initiate its bond-buying program, termed Outright Monetary Transactions, which will target short-term bonds of countries struggling to climb out of debt that have also requested aid from the European Stability Mechanism.

"The Governing Council will consider entering into OMTs to the extent that they are warranted from a monetary policy perspective as long as program conditionality is fully respected," Draghi said.

In so many words, the European Central Bank expects to purchase bonds from countries that comply with terms set up by the European community for international rescue loans.

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