No interest hike until late 2019 – Draghi
HOME owners with tracker mortgages got a reprieve as European Central Bank president Mario Draghi promised it will take its time before lifting interest rates.
It means that borrowers should not expect a hike in rates before the second half of next year.
“We will remain patient in determining the timing of the first rate rise and will take a gradual approach to adjusting policy thereafter,” Mr Draghi said at an economists’ forum organised by the ECB in Portugal.
“The path of very short-term interest rates that is implicit in the term structure of today’s money-market interest rates broadly reflects these principles,” Mr Draghi said.
He made it clear that the ECB’s plan to halt its massive bond-buying programme this year doesn’t mean the central bank is ready to withdraw its support from the market altogether.
ECB governing council member Erkki Liikanen said that economic developments remain key in determining the path of interest rates.
“The timing is important but also that the future depends on data,” he told reporters in Helsinki.
He added that the ECB may keep borrowing costs at current lows even after the end of summer next year “if it is needed, to ensure monetary policy provides adequate support to reaching the price stability target”.
Mr Draghi is almost unique as the head of a major central bank in never having raised interest rates.
It means borrowers, particularly those on tracker mortgages, have enjoyed an extended period of lower interest.
His term at the helm, since 2012, has been characterised instead by a massive effort to stimulate growth through loose financial policies.
Mr Draghi said euro-area inflation is finally picking up and the economy is showing underlying strength. At the same time uncertainty, including about fundamental global trade policies, has grown.