ECB’s Draghi: Will Try Anything to Maintain Interest Rates
Speaking before the European parliament, Mario Draghi, the chief of the European Central Bank, discussed the current state of European banking and what steps were likely to be taken in the near future.
The head of the ECB said that excess liquidity levels had to be monitored closely as they dropped toward levels where they could fuel rising market interest rates, also mentioning the possibility of guaranteeing additional lending from the ECB to banks in order to show the central bank’s commitment to keeping rates low.
Draghi’s main concern is to maintain the efficacy of the forward guidance put forth by the bank earlier this year, by which he stated that interest rates would remain at their historic lows of 0.5 percent for an extended period of time. As signs of an economic recovery being to pile up, many believe that the bank will be forced to raise interest rates sooner than expected. In addition, even if they do not, market interest rates could rise anyways, making it harder for businesses to obtain access to capital.