Jan. 12 - The European Central Bank's flood of cheap three-year money is helping the euro zone's banking system substantially and supporting confidence in the bloc's economy said it's President Mario Draghi after holding interest rates at 1 percent. Sonia Legg reports.
There were no surprises from the European Central Bank President - Mario Draghi kept interest rates at 1 percent. (SOUNDBITE) (English) PRESIDENT OF THE EUROPEAN CENTRAL BANK, MARIO DRAGHI, SAYING: "The information that has become available since early December broadly confirms our previous assessment. Inflation is likely to stay above two percent for several months to come, before declining to below two percent." Last month the ECB provided banks with nearly half a trillion euros of three-year money to help them fight the debt crisis. Draghi believes it's paying off. (SOUNDBITE) (English) PRESIDENT OF THE EUROPEAN CENTRAL BANK, MARIO DRAGHI, SAYING: "Our non-standard policy measures are providing a substantial contribution to improving the funding situation of the banks, thereby supporting financing conditions and confidence." But he said there are many challenges ahead. He's "very concerned" about the pressure from Hungary's authorities on the country's institutions, including the central bank. And he stressed despite some signs of stability the euro zone economy continues to face high uncertainty. (SOUNDBITE) (English) PRESIDENT OF THE EUROPEAN CENTRAL BANK, MARIO DRAGHI, SAYING: "Unemployment rate in the euro area now is creeping towards 10.3 percent. So job creation is first and foremost, one of the main objectives of economic policy and should be such in all countries." The rates hold was widely anticipated and caused only ripples on the markets. Oliver Roth is a trader in Frankfurt. (SOUNDBITE) (English) TRADER FOR CLOSE BROTHERS SEYDLER BANK, OLIVER ROTH, SAYING: "The ECB already has done a lot, they have lowered the interest rates twice in the last couple of weeks, so I guess that they try to save their decision making for further problems concerning the slowing economy in 2012, and I guess this is the right strategy." Draghi also welcomed news from Greece that private sector creditors would be involved in the second Greek bailout. Greece's Finance Minister has been meeting bank representatives in Athens to discuss a voluntary bonds swap to lighten the country's debt burden. Sonia Legg, Reuters.