Daily Sabah logo

Politics
Diplomacy Legislation War On Terror EU Affairs Elections News Analysis
TÜRKİYE
Istanbul Education Investigations Minorities Expat Corner Diaspora
World
Mid-East Europe Americas Asia Pacific Africa Syrian Crisis Islamophobia
Business
Automotive Economy Energy Finance Tourism Tech Defense Transportation News Analysis
Lifestyle
Health Environment Travel Food Fashion Science Religion History Feature Expat Corner
Arts
Cinema Music Events Portrait Reviews Performing Arts
Sports
Football Basketball Motorsports Tennis
Opinion
Columns Op-Ed Reader's Corner Editorial
PHOTO GALLERY
JOBS ABOUT US RSS PRIVACY CONTACT US
© Turkuvaz Haberleşme ve Yayıncılık 2025

Daily Sabah - Latest & Breaking News from Turkey | Istanbul

  • Politics
    • Diplomacy
    • Legislation
    • War On Terror
    • EU Affairs
    • Elections
    • News Analysis
  • TÜRKİYE
    • Istanbul
    • Education
    • Investigations
    • Minorities
    • Expat Corner
    • Diaspora
  • World
    • Mid-East
    • Europe
    • Americas
    • Asia Pacific
    • Africa
    • Syrian Crisis
    • Islamophobia
  • Business
    • Automotive
    • Economy
    • Energy
    • Finance
    • Tourism
    • Tech
    • Defense
    • Transportation
    • News Analysis
  • Lifestyle
    • Health
    • Environment
    • Travel
    • Food
    • Fashion
    • Science
    • Religion
    • History
    • Feature
    • Expat Corner
  • Arts
    • Cinema
    • Music
    • Events
    • Portrait
    • Reviews
    • Performing Arts
  • Sports
    • Football
    • Basketball
    • Motorsports
    • Tennis
  • Gallery
  • Opinion
    • Columns
    • Op-Ed
    • Reader's Corner
    • Editorial
  • TV
  • Business
  • Automotive
  • Economy
  • Energy
  • Finance
  • Tourism
  • Tech
  • Defense
  • Transportation
  • News Analysis

ECB to keep interest rates low until inflation reaches 2% target

by Reuters

FRANKFURT Jul 22, 2021 - 2:59 pm GMT+3
The headquarters of the European Central Bank (ECB) in Frankfurt, Germany, March 12, 2020. (AFP Photo)
The headquarters of the European Central Bank (ECB) in Frankfurt, Germany, March 12, 2020. (AFP Photo)
by Reuters Jul 22, 2021 2:59 pm

The European Central Bank (ECB) unveiled new policy guidance on Thursday that hints at even longer support for the bloc's struggling economy, in line with its recent commitment to boost inflation that has undershot the ECB's 2% target for nearly a decade.

The Frankfurt institution kept the rate on its main refinancing operations at zero, its marginal lending facility at 0.25% and its bank deposit rate at negative 0.5%, it said in a statement.

Unveiling a new strategy and a tweaked inflation target just two weeks ago, the ECB said that long periods of low inflation would require "especially forceful or persistent" policy support, a hint that stimulus might be kept in place for longer than many had predicted.

The ECB said it expects rates to remain at their present or lower levels until it sees inflation reaching its 2% target "well ahead" of the end of its projection horizon and durably for the rest of the projection horizon.

It also said progress in raising underlying inflation should be "sufficiently advanced" to be consistent with inflation stabilizing at 2% over the medium term.

"This may also imply a transitory period in which inflation is moderately above target," the ECB said in a statement.

The bank earlier promised that interest rates would stay at their present or lower levels until the inflation outlook in its staff forecasts "robustly" converged to a level close to the target, and underlying inflation dynamics were also showing such an upward trend.

Investors will now look for ECB president Christine Lagarde to unpack this guidance at her 1230 GMT news conference and explain the precise implications for interest rates and asset purchases.

But rate hike expectations have already been pushed out since the strategy update, and markets see no increase in the bank's deposit rate until 2024, so Lagarde may seek to conserve those expectations rather than push them out further.

Investors will also look for clues on the future pace of asset buys after the ECB kept the main parameters of both the Pandemic Emergency Purchase Program (PEPP) and the Asset Purchase Program (APP) unchanged.

The 1.85 trillion-euro PEPP is set to run at least until next March, with volumes in the third quarter significantly above levels at the start of the year. The APP will meanwhile run at 20 billion a month until just before the first rate hike.

  • shortlink copied
  • KEYWORDS
    european central bank interest rates stimulus monetary policy covid-19 outbreak
    The Daily Sabah Newsletter
    Keep up to date with what’s happening in Turkey, it’s region and the world.
    You can unsubscribe at any time. By signing up you are agreeing to our Terms of Use and Privacy Policy. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
    No Image
    Reborn Babies: Silent bundles of joy
    PHOTOGALLERY
    • POLITICS
    • Diplomacy
    • Legislation
    • War On Terror
    • EU Affairs
    • News Analysis
    • TÜRKİYE
    • Istanbul
    • Education
    • Investigations
    • Minorities
    • Diaspora
    • World
    • Mid-East
    • Europe
    • Americas
    • Asia Pacific
    • Africa
    • Syrian Crisis
    • İslamophobia
    • Business
    • Automotive
    • Economy
    • Energy
    • Finance
    • Tourism
    • Tech
    • Defense
    • Transportation
    • News Analysis
    • Lifestyle
    • Health
    • Environment
    • Travel
    • Food
    • Fashion
    • Science
    • Religion
    • History
    • Feature
    • Expat Corner
    • Arts
    • Cinema
    • Music
    • Events
    • Portrait
    • Performing Arts
    • Reviews
    • Sports
    • Football
    • Basketball
    • Motorsports
    • Tennis
    • Opinion
    • Columns
    • Op-Ed
    • Reader's Corner
    • Editorial
    • Photo gallery
    • DS TV
    • Jobs
    • privacy
    • about us
    • contact us
    • RSS
    © Turkuvaz Haberleşme ve Yayıncılık 2021