Draghi Sees Exit From Crisis Response Premature For Now

European Central Bank President Mario Draghi Wednesday warned that "downside risks" to growth remained and any discussion of how and when the ECB will unwind its unconventional measures to fight the crisis was premature, Dow Jones reported. Striking a cautious balance between taming stubbornly high inflation amid rising commodity prices and supporting the still-weak euro-zone economy, the ECB left its main interest rate unchanged at a 1% record low for the fourth straight month earlier Wednesday. "Downside risks to the economic outlook prevail" while broad stabilization is expected at a low level, Draghi told a news conference after the ECB's monthly rate decision. He added, however, that the euro zone is expected to recover "gradually in the course of the year." Draghi's comments reinforced expectations among analysts that the ECB will leave interest rates unchanged for a prolonged period of time. Nonetheless, the ECB didn't discuss interest rate cuts Wednesday and the decision to leave interest rates on hold was unanimous, Draghi said. Europe is teetering at the brink of a new recession with a survey Wednesday showing euro-zone business activity contracted in March while an earlier survey showed that manufacturing contractions in March extended from the weaker peripheral economies to powerhouses including Germany and the Netherlands. Howard Archer, an economist at IHS Global Insight said it was still notable that the ECB didn't appear to be noticeably more downbeat about recent euro-zone economic developments and the outlook, despite evidence that the economic activity may be faltering anew after showing some signs of stabilization at the start of the year, and despite some recent renewed concerns over the Spanish economy and public finances. Read more. (Subscription required.)