ECB keeps interest rate at record low and bond buying intact

COMPILED FROM WIRE SERVICES
ISTANBUL
Published 27.04.2017 15:08
Updated 27.04.2017 18:52
The logo of the European Central Bank (ECB) is pictured outside its headquarters in Frankfurt, Germany, December 8, 2016. (Reuters Photo)
The logo of the European Central Bank (ECB) is pictured outside its headquarters in Frankfurt, Germany, December 8, 2016. (Reuters Photo)

The European Central Bank left its monetary stimulus plan unchanged on Thursday after the bank held its benchmark refinancing rate at a historic low of zero and left its bond-buying programme at unchanged.

The Frankfurt institution kept its main refinancing rate at 0.0 percent, the rate on the marginal lending facility at 0.25 percent, and the deposit rate at -0.4 percent -- meaning banks have to pay to park money with the central bank.

It also left untouched plans to buy 60 billion euros of corporate and government bonds per month until December under its "quantitative easing" programme.

ECB watchers expected the bank to hold steady at this month's meeting, as political uncertainty and weak inflation discourage it from heading for the exit from its massive support for the economy.

The bank's interventions are designed to encourage banks to lend to the real economy, powering growth and pushing inflation towards its target of just below 2.0 percent.

But while the recent improvement in the 19-member eurozone economy has surprised many economists, ECB President Mario Draghi warned last week that the bank has yet to see any evidence of a sustainable rise in the region's inflation rate.

Annual eurozone inflation fell to 1.5 per cent in March from a four-year high of 2 per cent in February, the European Union statistics office Eurostat said last month.

Meanwhile, governors are anxious not to upset financial markets while eurozone heavyweight France navigates a high-stakes presidential election, which far-right anti-euro candidate Marine Le Pen has a real chance of winning.

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