ECB pursues stimulus and holds interest rates

The European Central Bank (ECB), the chief monetary authority for the countries that use the euro currency, yesterday held its interest rate benchmark at zero per cent.

The bank said its 25-member governing council “expects the key ECB interest rates to remain at their present levels for an extended period of time”. It will continue to buy bonds and is not cutting back on its stimulus policies, and president Mario Draghi stressed that it has not set a date for considering any changes to these.

Craig Erlam, senior market analyst at Oanda, said “The market is already working off the assumption that the ECB will gradually phase out bond-buying, with the program likely ending by the end of next year, possibly even the third quarter.

“Perhaps it’s time for the ECB to focus less on the intraday movements in the single currency and more on being transparent on its intentions,” he added.