ECB, keeping rates unchanged, stays quiet about future policy
FRANKFURT: The European Central Bank kept interest rates on hold at historic lows and its president said the bank was committed to pursuing substantial asset purchases aimed at spurring growth and inflation.
But in a news conference, Mario Draghi gave few hints as to what measures the bank could take later this year to ensure the asset-buying continued smoothly, saying only that policy-makers “took stock” of technical work on options being conducted by their staff.
He added that the policymakers did not discuss either ending the programme or extending it.
“Sometimes it’s... important to say what we did not discuss. And we didn’t discuss tapering or the intended horizon of our asset purchase programme,” he said.
With the eurozone economy enjoying what Draghi called “a moderate but steady” recovery, he defended the stimulus effort as being more successful than the ECB had hoped, and rejected suggestions that ultra-low rates were counter-productive.
“The conclusion was they don’t hinder the transmission of our monetary policy. In other words, low rates work,” he said.
In a widely expected decision earlier, the ECB kept the deposit rate at minus 0.4 per cent and maintained its guidance for rates to stay at their current or lower levels for an extended period.
The euro initially rose 0.5 per cent to $1.1040, after hitting a three-month low of $1.0952 earlier in the day. However it later fell back to $1.0938.
The ECB has provided unprecedented stimulus for years with sub-zero rates, free loans to banks and over a trillion euros in bond purchases, all in the hope of reviving growth and lifting inflation back to its target of just below 2 per cent after more than three years of misses.
The so-called quantitative easing (QE) scheme is now set to expire in March but the bank has always said that it would run until it saw a sustained recovery in inflation.