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Investing.com - European Central Bank head Mario Draghi said Thursday that financial market turmoil would make it necessary to reconsider its monetary policy stance in March, raising the prospect of further stimulus measures.
Draghi said that while the recovery in the euro area was moving ahead, risks to the outlook "remain on the downside", citing the fragility of the global economy and geopolitical risks.
"As we start the New Year, downside risks have increased again amid heightened uncertainty about emerging market economies' growth prospects, volatility in financial and commodity markets and geopolitical risks," he said.
"It will therefore be necessary to review and possibly reconsider our monetary policy stance at our next meeting in early March."
The euro zone inflation outlook is now “significantly lower’” than expected in December, Draghi said.
Risks from second round effects from oil prices should be “monitored closely,” he added.
Drahi said inflation expectations will be low in coming months, and will only pick up later this year.
The ECB left the deposit rate at -0.3% earlier Thursday after December’s cut and held the benchmark refinancing rate steady at 0.05%.
The bank expects interest rates to remain at present or lower levels for an extended period of time, Draghi said.
He noted that asset purchases under the banks quantitative easing program were proceeding smoothly and added that it clear its monetary policies were working.
He also reiterated that the ECB governing council has the determination to act and there are no limits within its mandate.
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