May 18, 2021

The ECB maintains interest rates while the European economy loses steam | Economy

The ECB maintains interest rates while the European economy loses steam | Economy



Mario Draghi keeps the rudder unchanged. As expected, the European Central Bank (ECB) has kept interest rates intact at the meeting of its Governing Council on Thursday. The reference rate continues at 0%, as well as the marginal credit facility, at 0.25%, and the deposit rate, which continues in negative territory at 0.4%. The body headed by Draghi keeps his speech unchanged despite the worsening of the international and European economic situation.

Analysts believe that the rate hike that was planned for this autumn is moving away for more pessimistic growth prospects as well as for the more contained inflation rate (in December it remained at 1.6%, moving away from the 2% environment that the ECB has as its objective). But the ECB does not pronounce itself for now. The speech is identical to last month's.

The ECB recently downgraded its growth forecasts for the eurozone. Last December, the agency announced that the GDP of the monetary union would rise by 201% in 2018 instead of the 2% it had previously anticipated; and this year's rise will be 1.7% against the forecast 1.8%. Draghi himself warned last week that the latest economic indicators are "weaker" than expected and that the uncertainties are still "notorious". "There is no place for complacency. We still need a significant level of monetary stimulus, "he said from Strasbourg at the celebration of the twentieth anniversary of the euro.

There are also no surprises regarding the asset purchase program that ended last December. As already announced then, the ECB will continue to reinvest "in full" the securities that are due "for a prolonged period after the date on which they start raising official rates." Thus, Draghi keeps point by point what he announced a little over a month ago.

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