January 27, 2021

The ECB delays the rise in interest rates until the end of 2019

The ECB delays the rise in interest rates until the end of 2019

The European Central Bank (ECB) decided today to maintain the reference interest rates and said that it will leave them there until the end of 2019, longer than it had reported so far, so it postpones the first rise since 2011 due to the economic weakening.

After the meeting of its Governing Council, the ECB said that it will continue to lend to the banks at 0% a week, will continue to charge them 0.4% for the excess of their reserves at one day (marginal deposit facility) and lending to a 0.25% day (marginal credit facility).

The ECB modifies its guidance on the movements of interest rates and affirmed that "they will continue at the current level, at least until the end of 2019."

Until now he had said that they would continue at the current level until, at least, during the summer of 2019.

The ECB reiterates that it is going to reinvest the principal of the bonds acquired through the program of purchase of public and private debt that will mature over a prolonged period after the date on which the official interest rates begin to rise.

The entity undertakes to reinvest the bonds "for as long as necessary to maintain favorable liquidity conditions and a broad degree of monetary accommodation," the statement added.

The president of the ECB, Mario Draghi, will comment on the decisions of the Governing Council in a press conference that will begin this afternoon at 13:30 GMT.

The ECB has modified its guidance on interest rate movements after the growth of the euro area economy has weakened more than expected.

Gross domestic product (GDP) increased by 0.2% in the euro area in the fourth quarter of 2018, compared to the previous quarter, according to Eurostat.

Compared to the same quarter of 2017, the growth was 1.1% in the countries of the single currency.

Given the economic weakening, it is possible that inflation will rise less as well.

The markets have long discounted that the ECB will not start raising interest rates until 2020.

The ECB will also publish its new macroeconomic forecasts today and a considerable downward revision of growth forecasts is expected.

Yesterday, the Organization for Economic Cooperation and Development (OECD) sharply downgraded its growth forecasts for the euro zone, especially Germany and Italy.

ECB Vice President Luis de Guindos said in Madrid recently that the ECB will revise downwards its growth forecasts in a similar way as the European Commission (EC) has done. EFE

aia / alf

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03/07/2019 14:05:06

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