ECB ready to cut rates, pump up liquidity if markets tighten too much

FRANKFURT (REUTERS) - European Central Bank (ECB) president Mario Draghi said on Thursday the bank was ready to take action if financial markets tightened liquidity too much in money markets.

He said the bank could either pump out more liquidity or even cut interest rates.

"If money market developments were to be judged unwarranted... then such an instrument should be considered," Mr Draghi told his regular monthly news conference. The economic recovery was "too green" to exclude such discussion, he said.

Earlier, the ECB held its main interest rate at a record low of 0.5 per cent. Mr Draghi reiterated its so-called forward guidance on policy - that it expects its key rates to remain "at present or lower levels" for an extended period of time.