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European Central Bank President Mario Draghi said on Tuesday that the central bank still has room to cut interest rates and measures to cushion the side effect from low interest rates.

Speaking at the ECB Forum on Central Banking in Sintra, Portugal, Draghi said, "Further cuts in policy interest rates and mitigating measures to contain any side effects remain part of our tools."

"And the APP [asset purchase programme] still has considerable headroom."

Risks to the euro area economic outlook remained tilted to the downside and indicators for the coming quarters suggest lingering softness, Draghi said.

"The prolongation of risks has weighed on exports and in particular on manufacturing," the ECB Chief said.

"In the absence of improvement, such that the sustained return of inflation to our aim is threatened, additional stimulus will be required."