ECB:Euro area economy should begin to recover later this year

17 Jan

Mario Monti

Euro area economy should start to recover gradually from recession this year as a consequence of lower interest rates and calming financial markets, according to the European Central Bank (ECB), which calls for structural reforms designed to liberalize the common market

Relaxed monetary policy strategy with significantly improved confidence in financial markets and reduced fragmentation should arrive in economy and the  global demand become stronger. Inflationary pressures should remain limited,” ECB said in a monthly report published Thursday and cited by Bloomberg.

The euro zone is in recession and the debt crisis, which started in 2010, is affecting demand and investment.

The ECB, which has kept monetary policy rate in January to record low of 0.75%, says bond buying program and operations support long-term liquidity helped restore a relative calm in financial markets. Now its up to governments to implement economic reforms, according to the ECB.

Structural reforms should be rapidly implemented to make the euro area more flexible, dynamic and competitive,” the bank report.

The economic perspective, however, presents risks even if several indicators have stabilized recently, says ECB.

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