Brussels, Belgium (4E) – European Central Bank President Mario Draghi cautioned that an extended U.S. government shutdown could put to risk the rebound in the economies of the U.S. and the rest of the world, echoing worries in Europe about the impact of the stalemate.
On Monday, about 800,000 workers were told not to report to work after Democrats and Republicans failed to strike a deal on the U.S. budget. The nation has never seen a government shutdown since 1995, which lasted three weeks, and cost the federal government $2.1bn in today’s monetary value.
In a press conference after the European Central Bank (ECB) voted to maintain its key borrowing rate at a record-low 0.5 percent, Mr. Draghi said that a protracted shutdown poses a risk. He added that a protracted shutdown in the U.S. budget would certainly be a risk for the U.S. and global economies.
Finance Minister Pierre Moscovici told his French colleagues in Paris that a protracted standoff in the U.S. could hurt France’s recovery, a government spokeswoman said on Wednesday.
Mr. Draghi reassured investors by saying that the ECB is open to further rate cuts and credit programs if required. He said that the possibility of an interest rate cut was discussed by the ECB rate board on Wednesday. The central bank’s forward guidance would help keep rates at current or lower levels “for an extended period of time,” Mr. Draghi said.