ECB ‘will provide further stimulus’

<p>The ECB is considering further stimulus for the euro.</p>

The European Central Bank (ECB) has warned that “further stimulus” could be on the cards for the European economy.

Mario Draghi, the bank's president, confirmed that the bank may be forced to take action if inflation in the eurozone continues to be low.

Mr Draghi, who was speaking after the International Monetary Fund's (IMF's) spring meeting in Washington in the US, hinted that more quantitative easing (QE) could be required.

"If you want policy to remain as accommodative as now, a further strengthening of the exchange rate would require further stimulus," he said.

The ECB recently announced that it was holding interest rates for another month, but Mr Draghi stated that ECB members are in agreement more QE would be the right step to take if inflation does not rise in the eurozone in the coming months.

A strengthening of the euro is one of the reasons Mr Draghi has been considering his options in a bid to boost economic recovery all over Europe.

Over the course of the last 12 months, the euro has risen by 5.5 per cent compared to the US dollar, as well as by almost ten per cent against the Japanese yen.

Economic recovery

The strength of the euro has been bad news for many of the major economies in Europe, with countries finding it hard to get growth up to an acceptable level as they continue to recover slowly from the recession.

Austerity has been the UK's economic plan for the last few years, with interest rates kept at a record low for the country of 0.5 per cent for more than five years in a bid to provide a stable environment for economic recovery.

The plan appears to have worked, as the IMF is now forecasting that the UK's economy is going to be the fastest growing of all the G7 nations for the full year 2014.

It estimates the UK economy will expand by 2.9 per cent in 2014, followed by a 2.5 per cent increase in 2015. This is the second time the IMF has raised its expectations for the UK economy in the last few months.

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