Draghi ready to cut rates as he says Cyprus rescue is a one-off

Marion Dakers
THE HEAD of the European Central Bank said yesterday he is ready to further loosen monetary policy for “as long as needed” to jolt the Eurozone back into growth.

Mario Draghi gave a gloomy statement on the struggling currency bloc’s economy, conceding that last year’s weak activity has spilled over into the start of 2013, and that any recovery in the second half is “subject to downside risks”.

Draghi also insisted that Cyprus’s bailout and subsequent attempt to tax all bank account holders last week was “not a template” for future rescues within the Eurozone.

“A levy on insured depositors…. That was not smart to say the least, and it was quickly corrected the day after,” he told a press conference following the ECB’s decision to hold interest rates at 0.75 per cent for the ninth month in a row.

He repeated his call on national governments to press ahead with cuts to budget deficits and supply side reforms. “We must be mindful about what the ECB can do. We cannot replace a lack of capital in the banking system. We cannot change governments’ lack of action,” he said.