European Central Bank (ECB) President Mario Draghi speaks during the monthly ECB news conference in Frankfurt January 9, 2014. (REUTERS/Ralph Orlowski)
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The European Central Bank Thursday forcefully underlined its determination to take action should eurozone inflation risk turning into deflation or rising money market rates threaten the bloc's fragile recovery.The euro initially fell on the more dovish ECB tone before recovering as Draghi said it was pointless to speculate what instruments the ECB might use next as it would depend on which scenario unfolded.Draghi had said in a magazine interview published last week that the ECB must be careful not to slip into a "danger zone" of inflation rates entrenched below 1 percent.Excess liquidity – the money from ECB loans – almost halved overnight to 157 billion euros ($213.53 billion) as banks took up fewer funds from the ECB, which has reduced liquidity further by offsetting its bond purchases.Draghi has repeatedly said banks returning money to the ECB is a positive sign and has said interbank markets are working better.
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