Daily Management Review

ECB Unlikely To Bring Interest Rates Into Positive Territory In 2020, Says ECB's Holzmann


ECB Unlikely To Bring Interest Rates Into Positive Territory In 2020, Says ECB's Holzmann
It is unlikely that the prime benchmark lending rates will be raised back in to the positive territory next year by the European Central Bank, said policymaker Robert Holzmann. He said that investors should not hope for such a surprise form the ECB.
"I do not expect a turnaround in 2020 to a positive interest rate environment," Holzmann said in a statement. He is the chief of the central bank of Austria. "In terms of content, however, we will certainly continue to deal with the topic of green finance next year."
The last time the ECB had raised interest rates for the Eurozone was in July of 2011 when the central bank had raised it by 25 basis points. And the last time the ECB had met to discuss and decide on monetary policy issue was in September this year following which it reduced the interest rate by 10 basis points.
Currently, the main refi rate is at a record low of 0 per cent while the rate of deposit by customers at banks is at -0.50 per cent. The current marginal lending rate within the Eurozone is at 0.25 per cent.
The New Year is likely to see Britain leave the European Union, Holzmann said while referring to the landslide victory of the British Prime Minister Boris Johnson in the most recently held national elections. He however said that even if the United Kingdom and the European Union agree on a divorce deal that amounts to an equivalent of a "soft Brexit", the overall losses for the UK will potentially be much larger form the divorce than those for the EU and Austria.
"The transition period ends in December 2020; An increase in uncertainty is then likely, because there is little time left for negotiations on future relationships and the outcome of the negotiations is open," Holzmann added.