Excerpt from the statement by Mario Draghi, President of the ECB:
Based on our regular economic and monetary analyses, we decided to keep the key ECB interest rates unchanged. HICP inflation rates have declined further, as anticipated, and fell below 2 percent in February. Over the policy-relevant horizon, inflationary pressures should remain contained. The underlying pace of monetary expansion continues to be subdued. Inflation expectations for the euro area remain firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2 percent over the medium term. Overall, this will allow our monetary policy stance to remain accommodative.
With regard to the liquidity situation of banks, counterparties have so far repaid €224.8 billion of the €1,018.7 billion obtained in the two three-year longer-term refinancing operations settled in December 2011 and March 2012. In net terms, this implies that, of the increase in the outstanding volume of bank refinancing through the ECB’s monetary policy operations of around €500 billion between mid-December 2011 and early March 2012, about €200 billion have now been repaid. These repayments reflect improvements in financial market confidence over the last few months and receding financial market fragmentation. Our monetary policy stance will remain accommodative with the full allotment mode of liquidity provision.
The March ECB macroeconomic projections for the euro area foresee annual HICP inflation in a range between 1.2 percent and 2.0 percent in 2013 and between 0.6 percent and 2.0 percent in 2014. In comparison with the December projections, the ranges are broadly unchanged. Macroeconomic projections also foresee average annual real GDP growth in a range between -0.9 percent and -0.1 percent in 2013 and between 0.0 percent and 2.0 percent in 2014. Compared with the December projections, the ranges have been revised slightly downwards. The revision for 2013 mainly reflects a more negative carry-over effect from the outcome for real GDP in the fourth quarter of 2012, while the projected path of the recovery has remained broadly unchanged.