Draghi pledges to keep interest rates low

Mario Draghi said the European Central Bank stood ready to use its "Vast array of instruments" to keep short-term market interest rates low, but its policy makers had decided to keep the main refinancing rate on hold for the fifth consecutive month. Against the backdrop of that split, debate has focused on tackling short-term interest rates that banks charge to each other, which have risen in recent months, even as the ECB has kept its main refinancing rate on hold at 0.5 per cent. From a low of 0.128 per cent last December, the three-month Euribor index - the average rate at which European banks can borrow three-month money - has edged up to 0.225 per cent. Mr Draghi said that lower levels of excess liquidity in the banking system, which is associated with the higher short-term interest rates that might trigger another LTRO, could also indicate a lessening of so-called financial fragmentation - the divergent real-world interest rates that businesses pay across the eurozone.

Source: http://www.ft.com/cms/s/0/35373476-2b47-11e3-a1b7-00144feab7de.html?ftcamp=published_links%252Frss%252Fglobal-economy%252Ffeed%252F%252Fproduct