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Draghi made renewed mention of the bank's primary mission of keeping
inflation under control, as spelled out in the basic EU treaty,
saying that task was "of the essence." That, along with expectations of a mild rather than deep recession, lead some analyst to think the ECB will not lower its benchmark rate below the current record low of 1 percent and may leave them unchanged into next year. Lower rates help growth but can worsen inflation if done at the wrong time. The bank has helped bring a period of respite from the eurozone debt crisis with two offerings of more than euro1 trillion ($1.32 trillion) in cheap, 3-year loans to banks. The loans added around euro500 billion net in new cash to the banking system, given that some of the money was moved to the new loan offering from previous ECB loan programs. The money has helped weaker banks repair their finances and led some of them to buy government bonds. That lowered borrowing costs for indebted governments such as Italy and Spain. High borrowing costs fed by fears of default are what drove Greece, Ireland and Portugal to seek bailout loans from other eurozone countries and the International Monetary Fund. The eurozone economy shrank 0.3 percent in the fourth quarter, and two quarters of negative growth is one definition of recession. The ECB's staff projections foresee growth between minus 0.5 percent and plus 0.3 percent this year.
[Associated
Press;
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