Daily Management Review

Key Interest Rates Remain Unchanged For The Euro Zone: EBC


07/29/2018




Key Interest Rates Remain Unchanged For The Euro Zone: EBC
The European Central Bank (ECB) expects that the key rate of interest for the euro area to remain at the current rates for at least through the summer of 2019. This prediction was made by the central banker of the European Union while maintaining the key interest rates earlier this week.
 
The ECB announced that the base interest rate for the Eurozone will be maintained at 0.00 percent, and the marginal lending rate and deposit rate remaining at 0.25 percent and minus 0.40 percent respectively.
 
"Our enhanced forward guidance has been very effective, we see no need to modify our language," ECB President Mario Draghi said at a press conference in Frankfurt, Germany.
 
Additionally, the central bank also reconfirmed that the monthly purchases of net asset will be reduced to 15 billion euros (17.6 billion U.S. dollars) starting October this year till the end of the complete year of 2018 following which the bank would end the net purchases program.
 
Draghi said: “Even after a gradual winding-down of our net asset purchases, the underlying strength of the Eurozone economy confirms the confidence of ECB that the sustained convergence of inflation to its aim will continue.” "Nevertheless, significant monetary policy stimulus is still needed", he confirmed.
 
With the aim of maintenance of a favorable liquidity condition and to maintain a sufficient degree of monetary easing throughout the euro area, the central bank wants to make reinvestments of the principal payments from maturing securities that was purchased for an extended period of time, following the end of the net asset purchases. There was however very little clarity of the details of reinvestment for the financial markets.
 
"Just to be clear on reinvestment, we haven't discussed it but the capital key remains our anchor," Draghi also clarified.
 
There is anticipation of the ECB that the rate of inflation is likely to be stable around the current level for the rest of the current year even while there has been an increase in the rate of inflation of the euro area to 2 per cent in June.
 
"While measures of underlying inflation remain generally muted, they have been increasing from earlier lows," Draghi said, underlying that uncertainty around the inflation outlook is receding.
 
"Patience, prudence and persistence are still the key words informing and inspiring our monetary policy," he summarized.
 
(Source:www.xinhuanet.com)






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