ECB’s Draghi says U.S. budget shutdown is a risk if prolonged

PARIS—The U.S. government shutdown could threaten economic recoveries in the U.S. and around the world if it persists, European Central Bank President Mario Draghi warned, echoing concerns raised elsewhere in Europe about the ripple effects of the standoff.

Mr. Draghi kept the door open to interest-rate cuts and other stimulus measures after the ECB’s monthly meeting. The ECB has a “vast array” of tools ready to deploy if needed to shore up the euro-zone economy, he said, citing new long-term loans as one option.

But the ECB took no action Wednesday, despite Mr. Draghi’s grim assessment of the euro-zone recovery as “weak, uneven and fragile” and his expectation that inflation will stay on the “very low side” of the ECB’s 2% target.

“There hasn’t been a signal that talk [from the ECB] is going to turn into effective action,” said Ken Wattret, economist at BNP Paribas.

The euro climbed sharply against the U.S. dollar on Mr. Draghi’s comments, which analysts interpreted as suggesting any fresh monetary stimulus is still a long way off.

“The U.S. budget shutdown is a risk if protracted,” Mr. Draghi said at a news conference after the ECB voted to keep its main lending rate at a record-low 0.5%, as expected. “At the present time, the impression one has is that it will not be so. If it were to be protracted, it would certainly pose a risk for the recovery in the U.S. and the world. And this is clearly on our minds.”