Daily Management Review

The ECB kept key interest rates on previous levels


09/13/2018


The European Central Bank (ECB) left key interest rates unchanged at the end of the September meeting.



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The ECB left interest rates on loans at zero level. The regulator also retained the deposit rate at the level of minus 0.4% per annum, the rate for marginal loans - at the level of 0.25% per annum.

The Central Bank again stated that it intends to keep key rates at their current levels at least until the end of the summer of 2019.

"The Board of Governors expects that the key interest rates of the ECB will remain at their current levels at least until the end of summer 2019 and in any case as long as it is necessary to ensure a further steady inflation approach to a level slightly lower but close to 2 % in the medium term," the ECB said in a statement.

The regulator also reiterated that net asset purchases will be discontinued by the end of December.

"The Board of Governors will continue to conduct net purchases under the asset purchase program (APP) at a current rate of € 30 billion a month before the end of this month," the regulator said.

"After September 2018, the Board of Governors will reduce the monthly net purchases of assets to € 15 billion by the end of December 2018 and expects that if the data confirming the medium-term inflation forecast are received, net purchases will then be discontinued," the ECB said.

"The Board of Governors intends to reinvest major payments from the redemption of securities purchased under APP for a long period after the end of net asset purchases and in any case as long as it is necessary to maintain favorable liquidity conditions and sufficient monetary stimulus," - said the central bank.

Now the attention of market participants is drawn to the head of the ECB Mario Draghi. He is expected to present updated forecasts of growth and inflation and a risk assessment for projections.

Another important topic for discussion is likely to be the situation in Italy, where earlier the League and the 5-Star Movement, which formed the coalition, criticized the EU's restrictions on government loans and expenditures.

At present, the new coalition government of Italy is working on the budget for the next year. Italy is the third largest economy in the euro area, and the prospect of economic collapse in the country could damage the financial and political stability of the entire region.

source: reuters.com






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