June 6 - The European Central Bank keeps interests rates on hold at a record low of 0.5 percent, adding that improving economic data suggested a recovery was slowly but surely on its way. Rough Cut (no reporter narration).
ROUGH CUT - NO REPORTER NARRATION The European Central Bank kept its main interest rate on hold at a record low 0.5 percent on Thursday (June 6), saying that improved economic data in May confirmed its forecast of a gradual recovery from prolonged recession later this year. SOUNDBITE: European Central Bank President, Mario Draghi, saying (English): "Based on our regular monetary and economic analysis, we decided to keep the key ECB interest rates unchanged. Incoming information has confirmed our assessment which led to the cut in interest rates in early May. The underlying price pressure in the euro area is expected to remain subdued over the medium-term." "The accommodative stance of our monetary policy together with a significant improvement in financial markets since mid 2012, should continue to support prospects for an economic recovery later in the year." "I would say the plea here is don't get too optimistic about the present market condition. Don't interpret the present market condition as one that would allow any protracted relaxation of fiscal standards without undertaking structural reforms at the same time, without increasing competitiveness. That's the message that I would have and that's the message that's what is meant." "Greece has undertaken an extraordinary adjustment. There is ownership of this adjustment by the government and really we have to acknowledge the progress that this country has undertaken, has achieved and if we look at a few years ago, it would have been unthinkable." ECB President Mario Draghi told a news conference the bank's easy monetary policy "should continue to support prospects for an economic recovery later in the year" and it would remain "accommodative" for as long as necessary. He also said the bank was still looking at ways to boost lending to small and medium-sized enterprises (SMEs) and revitalising the market for asset-backed securities but any action was "not for the short-term". The ECB slightly lowered its economic outlook for the euro area this year, saying output would decline by 0.6 percent in 2013 but grow by 1.1 percent next year. ECB staff forecast inflation of 1.4 percent this year and 1.3 percent in 2014 -- below the bank's target of below but close to 2.0 percent. Draghi said the rate-setting governing council discussed at its monthly meeting the possibility of cutting the rate at which banks deposit money with the central bank to below zero. The ECB was technically ready to do so but would keep this and other unconventional options "on the shelf" for now, he said. Draghi did not rule out further policy action if needed. He kept up pressure on euro zone governments to maintain the pace of deficit and debt reduction, saying that countries should be given more time to correct excessive deficits only in exceptional circumstances. His comments sounded critical of the European Commission's decision last week to propose more time for five countries to cut their budget shortfall to the EU limit of 3 percent of GDP, including a two-year extension for France. Draghi also praised the work carried out by Greece to stabilise its economy.