European Central Bank president forecasts 'damp' recovery for eurozone economy

The president of the European Central Bank has said he expects the economic recovery in the eurozone to be "dampened", in part due to uncertainty triggered by the EU referendum.

Mario Draghi said on Thursday that he anticipates the single currency zone's economic recovery to proceed at a "moderate but steady pace".

But he added: "The economic recovery in the euro area is expected to be dampened by still-subdued foreign demand, partly related to the uncertainties following the UK referendum outcome."

Mr Draghi also cut eurozone growth expectations for 2017 and 2018, from 1.7% to 1.6%, although the Bank raised forecasts for 2016 from 1.6% to 1.7%.

The ECB left the bloc's main interest rate unchanged at 0% at a meeting of the Bank's general council.

Mr Draghi added that the ECB's quantitative easing programme will continue at a rate of €80bn a month until March 2017 "or beyond if necessary".

Shilen Shah, bond strategist at Investec Wealth & Investment, said: "Despite the market noise caused by the Brexit vote, the ECB believes the impact on eurozone GDP is likely to be only moderately negative, with the GDP forecast lowered by 0.1% in 2017 and 2018."