(menafn – ecpulse) ECB President Mario Draghi in testimony to the European Parliament on Tuesday said the ECBs new bond-buying plan is ready to act to prevent any occurrence of "destructive scenarios" in the 17-country region.
He clarified that "the ECB will conduct OMTs if and as long as countries comply with strict and effective conditions attached to an appropriate programme."
Regarding the status of the economy, he said there are some signs of improvement that appeared over the past couple of months yet "the road ahead is still long and its uphill," showing that the main problem is that the crisis had yielded in a status of lack of confidence.
The euro area is still suffering from remarkable weakness and will only find recovery in a gradual manner as euro area economies are likely to continue with their austerity measures to bring back deficit to targeted levels, yet he referred that there is not alternative for cutting spending.
Draghi revealed that the ECB expects weak economic activity in the near term whereas inflation risks remaining broadly balanced.
In addition, he highlighted that the region is prone to high risk stemming from financial instability.
He added that banks outside the euro area should have the same conditions for taking part in an EU-wide banking supervisor.
Today, the IMF lowered growth forecast for the euro area to 0.4 percent contraction this year, which is 0.1 percentage point lower than Julys forecasts, while grow 0.2 percent next year, revised down from prior estimates of 0.7 percent.
Both IMF forecasts and Draghi comments pushed the euro lower versus the dollar to hit a low of 1.2906, compared with the days opening of 1.2967.