Frankfurt: The European Central Bank held interest rates at record lows and kept the door open to more stimulus yesterday but gave few hints about its next move, disappointing markets that had priced in a decisively dovish tone.
The euro zone’s central bank kept its deposit rate at -0.4 per cent, charging banks for parking cash overnight, and held the main refinancing rate, which determines the cost of credit in the economy.
ECB President Mario Draghi said the ECB will study policy options to ensure it can pursue its unprecedented money-printing programme but did not hint at the anticipated extension of its asset purchases,
maintaining the March end-date in an unexpectedly balanced message.
Facing anaemic growth and inflation, the ECB is buying 1.74 trillion euros worth of bonds, holding rates deep in negative territory and giving banks free loans, hoping to end the bloc’s nearly decade-long economic malaise with an infusion of cheap credit.
It has managed to prop up growth, but not enough, and even shaved some of its forecasts yesterday, reinforcing market expectations that more monetary stimulus is just a matter of time.
“For the time being, the changes (in forecasts) are not substantial (enough) to warrant a decision to act,” Draghi said, adding that an extension of the ECB’s asset buys was not
In the biggest clue about its next step, he said the ECB had asked internal committees to look at various options to ensure the smooth running of asset buys.