The European Central Bank (ECB) held interest rates steady on Wednesday, shortly after the International Monetary Fund (IMF) sharply downgraded its economic growth forecast for the euro zone economy.
The ECB has been forced to backtrack its plans to tighten monetary policy, amid an intensifying climate of economic gloom.
Speaking at a press conference in Frankfurt, Germany on Wednesday, ECB President Mario Draghi warned that data gathered by policymakers in recent weeks had confirmed “slower growth momentum” in the euro zone.
Economic uncertainty relating to geopolitics, protectionism and emerging markets had negatively impacted investor sentiment in the bloc, he added, with risks “tilted toward the downside” over the coming months.
The German 10-year government bond yield, an important benchmark for European fixed income assets and one that is viewed as a safe-haven for investors, dipped into negative territory on the back of Draghi’s comments. The euro also hit session lows against the dollar, down 0.3%, to trade at 1.1232.
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