ECB: we’re ready to step in

THE European Central Bank has ‘stepped up’ plans to kick-start the economy as it faces the twin threats of recession and deflation.

ECB president Mario Draghi said the central bank is getting ready to offer more stimulus to the struggling eurozone and will make a decision early next year.

It came as the Frankfurt-based institution slashed its growth forecasts for the single currency bloc from 1.6pc to 1pc for 2015 and from 1.9pc to 1.5pc for 2016.

Inflation is expected to be just 0.7pc next year, below the target of just under 2pc.

The ECB left interest rates across the region unchanged yesterday and resisted moves to prop up the ailing economy.

But Draghi said officials stand ready to act and that ECB staff ‘have stepped up the technical preparations for further measures’ – including quantitative easing. He said the ECB could act without German support, setting him on a collision course with opponents in the region’s biggest and most important economy.

‘QE has been shown to be effective in the United States and UK,’ said Draghi. ‘Do we need to have unanimity to proceed on QE or can we have a majority? I think we don’t need unanimity.’

RBS analyst Richard Barwell said: ‘Draghi is playing hardball, where he hopes that doing nothing today increases the chance of doing enough tomorrow.’

The Bank of England left interest rates unchanged yesterday, pegging them at 0.5pc for a 70th month in a row.

David Tinsley, an economist at UBS, said he expects the Bank to raise UK rates to 0.75pc in August as ‘robust’ economic growth overshadows the fall in inflation.