FRANKFURT AM MAIN: The European Central Bank on Thursday held interest rates at historic lows and left its massive stimulus scheme unchanged, a spokeswoman said, confirming expectations the bank would play it safe as the eurozone outlook clouds over.
ECB governors decided at a regular policy meeting to leave the main refinancing rate at zero percent and the rate on the marginal lending facility at 0.25 percent.
The rate on the deposit facility stayed at minus 0.40 percent -- meaning banks have to pay to park their excess cash with the ECB.
Policymakers also stuck to the bank's 30-billion-euro ($37-billion-euro) bond-buying programme, which is scheduled to run at least until September.
Analysts had expected the ECB not to announce any policy changes, especially after it last month dropped a long-standing pledge to expand the bond purchases again if needed -- a move seen as a vote of confidence in the eurozone economy.
Since then however a slew of economic data has signalled that the single currency area got off to a rocky start this year after a robust 2017, complicating the ECB's efforts to gradually exit its crisis-era stimulus measures.
Concerns about protectionist threats, geopolitical risks and global trade tensions have added to doubts about the strength of the eurozone recovery.
- Outlook uncertain -
"The sudden deterioration of growth indicators in the last couple of months raises uncertainty about the outlook," Unicredit analysts said in a client note.
US President Donald Trump has fanned fears of a trade war with plans to slap tariffs on European steel and aluminium imports from May 1 unless he agrees to sign a waiver -- which the German government on Thursday said seemed unlikely.
Trump has also threatened tariffs on billions of euros in Chinese imports, prompting China to vow to respond in kind -- and leaving Europe's export-reliant firms on edge.
ECB chief Mario Draghi can expect a grilling on how concerned he is about the economic headwinds when he faces reporters at a 1230 GMT press conference.
Investors will also be looking to Draghi for clarity on when exactly the bank plans to end its asset-purchasing scheme.
Many ECB watchers expect the bank to wind down its government and corporate bond buying between September and December, with the first rate hikes to follow in the mid-2019.
Along with ultra-low interest rates, the bond-buying programme is designed to stoke growth by pumping cash through the financial system, helping boost inflation to the ECB's target of just under 2.0 percent.
Economic growth in the 19-country eurozone hit its highest level in a decade last year at 2.3 percent, fuelling calls for the ECB to begin normalising monetary policy.
But eurozone inflation stood at just 1.3 percent in March, suggesting some support remains needed.
Comments
Comments are closed for this article.