The European Central Bank expectedly kept the interest rates unchanged

September 13, 2018 1:42 pmComments Off on The European Central Bank expectedly kept the interest rates unchangedViews: 12

European Central BankThe European Central Bank (ECB) expectedly kept the interest rates unchanged, but has signaled that net asset purchases will end in December only if macro data confirm its medium-term inflation expectations. This is clear from today’s decision of the ECB published on the institution’s website.

At today’s meeting the ECB kept unchanged the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility at 0.00%, 0.25% and -0.40%, respectively. The Governing Council expects the key ECB interest rates to remain at their current level for at least a period that includes the summer of 2019, and in any case as long as necessary to ensure further sustainable approach of inflation to levels below but close to 2% in medium term.

As for non-standard monetary policy measures, the Governing Council will continue to make net purchases under the asset purchase program with a current monthly rate of 30 billion EUR by the end of this month. After September 2018 the Governing Council will reduce the monthly rate of net purchases to 15 billion EUR until the end of December 2018 and then expects net purchases to be completed.

The Governing Council intends to reinvest principal payments of securities acquired under the program to purchase assets over a long period of time after net purchases of assets, and in any case as long as necessary to maintain favorable liquidity conditions and a significant degree of unrestricted monetary policy.

Already in June, the central bank outlined its plans to end its massive bond purchase program in December, hinting that interest rates are likely to remain at the current ultra low levels until at least the summer of 2019.

The markets are awaiting the messages from the ECB Governor Mario Draghi. Among the most interesting news topics are the reinvestment of cash from the current bond purchase program and current inflation expectations.

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