EUR News

Greek banks may require more capital than the Bank of Greece estimated this month, the European Commission, European Central Bank and International Monetary Fund said in a joint statement.

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The interest rate announcement from the Swiss National Bank and industrial trends survey from the U.K. are due on Thursday, headlining a light day for the European economic news.

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The euro area private economy maintained its growth momentum in March, with activity expanding for the ninth consecutive month, preliminary survey data from Markit Economics showed Monday. The flash composite output index came in at 53.2 in March. The above 50 score signals expansion. However, the score was slightly lower than February's 32-month high of 53.3 and the expected level of 53.1.

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Consumer sentiment data from Germany is due on Wednesday, headlining a light day for the European economic news.

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Germany's EU measure of inflation slowed for a second straight month in March to its lowest level in nearly four years, adding pressure on the European Central Bank to cut interest rates in next week's meeting.

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The French economy recovered as initially estimated during the final quarter of 2013, data from the statistical office Insee showed Monday.

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Eurozone private sector expanded for the ninth successive month in March and signals better recovery prospects, survey data from Markit Economics showed Thursday.

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European Central Bank President Mario Draghi on Thursday vowed swift action against risks of a prolonged period of low inflation in the euro area and downside risks to the region's growth.

"We will monitor developments very closely and will consider all instruments available to us," Draghi said in his introductory statement in the customary post-meeting press conference in Frankfurt.

"We are resolute in our determination to maintain a high degree of monetary accommodation and to act swiftly if required."

The central bank left the main refi rate unchanged at a record low 0.25 percent for a fifth month running, earlier today. The marginal lending facility rate was retained at 0.75 percent, while the deposit rate was kept at zero.

"We do not exclude further monetary policy easing and we firmly reiterate that we continue to expect the key ECB interest rates to remain at present or lower levels for an extended period of time," Draghi said. He cited the overall subdued outlook for inflation, given the broad-based weakness of the economy, the high degree of unutilised capacity and subdued money and credit creation as reasons behind the bank's assessment.

"The Governing Council is unanimous in its commitment to using also unconventional instruments within its mandate in order to cope effectively with risks of a too prolonged period of low inflation," Draghi added.

The moderate recovery in euro area is proceeding as expected and the inflation trajectory is consistent with its assessment of a prolonged period of low inflation, followed by a gradual upward movement in HICP inflation rates, the ECB said. Inflation expectations remain anchored to ECB's price stability target of 'below, but close to 2 percent', the bank added.

Responding to questions from reporters, Draghi said the bank has not exhausted its pool of conventional tools and its forward guidance has been successful. Policymakers discussed lower interest rates and narrowing of the rate corridor today, he said.

The Governing Council also considered unconventional measures such as quantitative easing and negative deposit rate, during the discussion, which Draghi described was "ample and rich".

There is no risk of deflation in euro area as of now, he repeated, adding that his biggest fear is a protracted stagnation of economic recovery. Further, he said the longer inflation remains low, the higher will be the risk for long-term inflation expectations.

Draghi's dovish comments caused the euro to promptly drop against the U.S. dollar. While euro exchange rate is very important for price stability, it is not a policy target, he reiterated, adding that policymakers are closely monitoring geopolitical risks and exchange-rate developments.

Consumer price inflation eased to a more than four-year low of 0.5 percent in March, which Draghi said was a 'genuine surprise' for the ECB and producer prices declined the most since late 2009.

He also said policymakers will study the March figures more closely, as it was distorted partly by the effect of Easter holidays falling in April this year, while they were in March in 2013.

The ECB expects inflation to pick up in April. He also acknowledged that ECB underestimated energy prices due to profound changes taking place in the energy market.

The International Monetary Fund upped the pressure on the ECB to act with IMF Managing Director Christine Lagarde, in a speech on Wednesday, warning of an emerging risk of "low-flation", particularly in the euro area.

While welcoming the IMF's 'generous' suggestions, Draghi asserted that the Governing Council's viewpoints were different.

Elsewhere today, the Paris-based Organisation for Economic Cooperation and Development said in a report that Eurozone monetary policy should remain accommodative for an extended period of time as inflation rates are substantially below the ECB's objective and output below its potential.

"Risks of deflation or a protracted period of very low inflation remain as the large degree of economic slack has put persistent downward pressure on inflation, which is well below the ECB's quantitative definition of price stability," the think tank said.

"If substantial uncertainties were to re-emerge, or if deflationary risks intensify, additional non-conventional measures should be considered."

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The French economy likely grew 0.2 percent in the first quarter of 2014, the Bank of France said on Tuesday.

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Greece's import prices fell sustained the falling trend in February, data from the Hellenic Statistical Authority showed Friday.

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