European Central Bank president Mario Draghi announced the decision to suspend further curbing of the interest rates as he sees “the light at the end of the tunnel”. It is too early to tell the outcomes of the crisis are tackled, but the recovery is observed in many EU member states; deflation in the Eurozone was fully defeated, and imbalances became lower in proportions. Such “encouraging signals” prove the ECB pursues the correct policy enabling the ECB to refuse reduction of the benchmark interest rate. It should be noted that the ECB reduced the key rate to 0.25% annually, thus proving the fears about prolonged period of low inflation in the Eurozone. Mario Draghi is sure that there is no reason to bother about possible deflation and sees a clear difference between the situations in Japan and Europe, which look similar at first sight. “At the moment we do not see the necessity to reduce the rate; the crisis is not over, however, there are a lot of encouraging signals,” Draghi said. Among them the economic growth in some states and the cut of budget deficit in the EU countries; many indices surpassed the forecasts made by ECB analysts. Despite the low figures recorded early last year, 0.3% in the second quarter, the economic recovery was moderate, 0.1%, in the third quarter, amid data on Italian and French GDP decline. Nowadays, the ECB has the reason to be optimistic; according to the recent data, PMI Manufacturing in the Eurozone and Consumer confidence indices in December surged considerably. Moreover, among the tools for further growth stimulation Draghi can allocate banking institutions more long-term loans.
