Euro jumps after Mario Draghi relaxed statement on Brexit impact

Economists were expecting no change to current rates, with the headline deposit rate remaining at minus 0.4 per cent and a 0.25 per cent rate on sums borrowed from the ECB by banks.

The bank will continue this quantitative easing programme until March 2017 and beyond “if necessary” as it tries to stimulate economic activity across the eurozone.

But while analysts polled by Reuters cut their 2017 euro zone growth forecasts to 1.3 percent from 1.6 percent, they left their inflation projection unchanged at 1.3 percent, a mixed reading for the European Central Bank, which targets inflation at just below 2 percent. Prime Minister Matteo Renzi has floated the idea of using government money to bail them out, which could provoke a conflict with new European Union rules created to limit the burden of rescuing banks on taxpayers’ wallets.

But its president, Mario Draghi, stressed Thursday that the bank would need more time to monitor the situation and refrained from any clearer indications of what would force its hand.

The bank deposit rate was also maintained at minus 0.4%.

The ECB did not announce any fresh easing policies.

“Over the coming months when we have more information. we will be in a better position to reassess the underlying macroeconomic conditions”, Mr Draghi added. There were also no hints that the bank would or would not adjust interest rates further and no comments on exchange rates.

Mr Draghi said: “Following the United Kingdom referendum on European Union membership, our assessment is that euro area financial markets have weathered the spike in uncertainty and volatility with encouraging resilience”.

However, the poll also found that economists expect the European Central Bank to tweak its programme by both extending it and widening the range of assets it’s prepared to buy. According to the Kitco.com gold currency charts, the yellow metal in euro terms last traded at $1,195.41, up 0.03% on the day.

He has now called on eurozone governments to address the bad loans weighing down Italy’s banks and put in place “growth-friendly” policies.

Ian Kernohan, economist at Royal London Asset Management, said: “While we think Brexit uncertainty is mainly an issue for the United Kingdom economy, there is also bound to be some knock-on impact on the eurozone”.