September 8, 2016 8:47:19 pm
The European Central Bank left interest rates unchanged as expected on Thursday and maintained the key parameters of its 1.74 trillion euro ($1.95 trillion) asset buying programme as it seeks to revive growth and inflation. The decision to leave rates on hold was expected by almost all 70 analysts polled by Reuters but a sizable minority also expected an extension of the asset buys, now set to wind down next March.
Facing high unemployment, weak growth and the threat of deflation, the ECB has provided extraordinary stimulus in recent years, cutting interest rates deep into negative territory and pushing the cost of credit to all-time lows, hoping to jump start growth. But inflation is still barely above zero and will hold below the ECB’s 2 per cent target for years to come, supporting calls for even more central bank policy easing.
Repeating its forward guidance, the ECB added that it continues to expect its key interest rates to remain at present or lower levels for an extended period of time and well past the horizon of the net asset purchases.
It also said that its 80 billion euro per month asset purchase programme is intended to run until the end of March 2017, or beyond if necessary, and until the bank sees a sustained adjustment in the path of inflation consistent with its inflation aim.
At Thursday’s meeting, the ECB kept its rate on bank overnight deposits, which is currently its primary interest rate tool, at -0.40 percent.
The main refinancing rate, which determines the cost of credit in the economy was unchanged at 0.00 per cent while the rate on the marginal lending facility — or emergency overnight borrowing rate for banks — remains at 0.25 per cent.
Markets now turn their attention to ECB President Mario Draghi’s 1230 GMT news conference, where he will unveil fresh GDP and inflation forecasts.
($1 = 0.8902 euros)
📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines
- The Indian Express website has been rated GREEN for its credibility and trustworthiness by Newsguard, a global service that rates news sources for their journalistic standards.