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ECB not in a hurry to cut rates further - Draghi

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December 28
11:07 AM 2013

In a German news magazine Spiegel interview, European Central Bank President Mario Draghi said there is no urgency to cut the interest rate of the Euro Zone down further. The interview published on Saturday also quoted Draghi, who said that there are no signs of deflation. The Italian had led the ECB since 2011.

"We are not seeing any deflation at present... but we must take care that we don't have inflation stuck permanently below one percent and thereby slip into the danger zone," Draghi stated.

Draghi added that there are many encouraging signs in the Euro Zone despite the fact that the crisis has yet to be beaten, such as shrinking budget deficits, easing trade imbalances and economic recoveries in some countries.

When he was asked about additional interest rate cuts after the central bank of Europe had reduced its main refinancing rate to 0.25% in November, which was a record low, Draghi said, "At the moment we don't see a need for any urgent action."

Draghi also said that it was not healthy or normal for real interest rates, the rate savers that receive after they allow for inflation, to be negative.

"In some countries they are negative, in others positive - even too high. We are very aware of the risks of this fragmentation," Draghi said.

The yearly inflation rates in the Euro Zone in November had ranged from negative 2.9% in Greece to 1.6% in Germany, based from European Union data. Draghi said the risks associated with asset bubles such as in some property markets in Europe or the risks associated with falling prices were limited.

Draghi also stated that markets in Europe had expected for inflation to rise to the target level of ECB, which is near but below 2%. He also added that turning to the new government in Germany, which are the Social Democrats (SPD) and a Angela Merkel's conservatives, it was too early for the central bank to make some judgements on the bank's policies. The German government had been criticized over its proposal to introduce a minimum wage of 8.5 euros per hour by some industry groups.

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