ECB president Mario Draghi has warned uncertainty about future EU-UK relations means GDP forecasts should be taken with a “grain of caution”.
Draghi was speaking at press conference following his announcement today that the ECB would make no changes to interest rates or its existing asset buying programme.
Speaking on GDP estimates, Draghi said: “The figure that circulated in the aftermath of Brexit was 0.2 to 0.5 per cent over three years. I think we should take these estimates with some grain of caution.”
“Large uncertainties prevail. These figures depend on how long the stretch of time is going to be for these negotiations to be completed and to [achieve] a certain outlook, which we don’t have with us today. Second these figures will depend on what type of outcome is going to come out.”
Draghi also said that the central bank had not observed any disruptions to the banking system in the period following the UK’s vote to leave the European Union.
“This was because the large liquidity that was abundant and the preparation that all central banks have undertaken before, ensuring liquidity lines would be available and certainly the accommodative monetary policies undertaken by all central banks at the present time,” Draghi said.
“Financial markets and the banking sector, in spite of the large changes in the stock prices, have reacted in a fairly resilient fashion to the event.”
In a statement accompanying today’s decision, the ECB governing council said interest rates will remain at “present or lower levels for an extended period of time, and well past the horizon of the net asset purchases”.
The central bank’s existing asset purchase programme, which was extended to €80bn a month earlier this year, is currently set to finish in March 2017.
Following today’s announcement, the ECB’s headline rate remains at zero per cent, the deposit rate at negative 0.4 per cent and the marginal lending facility at 0.25 per cent.