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ECB keeps interest rates unchanged

FRANKFURT
2019-01-25 08:43

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European Central Bank (ECB) President Mario Draghi attends a press conference at the ECB headquarters in Frankfurt, Germany, Jan. 24, 2019. The European Central Bank (ECB) Thursday announced to keep the key interest rates for the euro area unchanged at least through the summer of 2019. 


The European Central Bank (ECB) announced on Thursday that it would keep the key interest rates for the euro area unchanged at least through the summer of 2019.

Following the two-day governing council meeting, the ECB decided to leave its forward guidance on interest rates and the reinvestment of maturing securities unchanged on Thursday, after ending its massive asset purchase program in December, as the balance of risks surrounding the euro area growth outlook have moved to the downside.

"The risks surrounding the euro area growth outlook have moved to the downside on account of the persistence of uncertainties related to geopolitical factors and the threat of protectionism, vulnerabilities in emerging markets and financial market volatility," said the ECB President Mario Draghi at the press conference.

At the previous meeting, the ECB still believed that "The risks surrounding the euro area growth outlook can still be assessed as broadly balanced".

As most of the eurozone data releases since the December ECB's policy meeting point to the economy is slowing down, the ECB is broadly expected to leave policy unchanged this week, and suggest that the balance of risks has turned to the downside.

The flash Eurozone Purchasing Managers Index (PMI) Composite Output Index dropped to a 66-month low in January, with the flash Eurozone Manufacturing PMI falling to a 50-month low, reported financial information services provider Markit early Thursday.

Given the weaker growth and inflation outlook, and the persistent uncertainties linked to global trade and politics, some economists now expect the ECB will not raise interest rates until 2020.

At the December meeting, the ECB took a crucial step towards normalizing policy with formally announcing the bond-buying exit after almost four years and 2.6 trillion euros asset purchases.

At Thursday's ECB meeting, it was decided that the eurozone base interest rate would remain at 0.00 percent, with the marginal lending rate and deposit rate remaining at 0.25 percent and minus 0.40 percent respectively.
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