adminPARIS. — The European Central Bank held its key rates unchanged, as widely expected, at its monthly policy meeting yesterday, with markets looking out for some signals about possible new liquidity moves.
The ECB’s governing council voted to keep the bank’s key “refi” refinancing rate steady at an all-time low of 0,50 percent, it said in a statement.
The central bank also left its other two rates — the deposit rate and the marginal lending rate — at zero percent and 1 percent respectively.
No analysts or ECB watchers had been expecting the central bank to announce any further policy moves this month given recent signs of economic improvement in the euro area.
ECB chief Mario Draghi was scheduled to explain the reasoning behind the decision at his regular monthly post-meeting news conference.
The ECB is meeting in Paris this month, instead of the usual venue of its headquarters in Frankfurt. And the meeting has been brought forward by one day, given the public holiday in Germany today.
Capital Economics economist Ben May said the ongoing improvement in the outlook for the eurozone economy “has ruled out an ECB interest rate cut today”.
May said: “However, given the recent falls in the amount of excess liquidity, Draghi is likely to make it clear that the ECB stands ready to act if this prompts a rise in market interest rates that threatens the fragile economic recovery.”
Money market rates in Europe have been rising recently amid talk about a so-called “tapering” or winding down of anti-crisis measures by the US Federal Reserve on the other side of the Atlantic.
But the US Fed recently sought to counter such speculation by insisting it will keep its foot on the monetary stimulus pedal.
At the bank’s last meeting, Draghi said the ECB was “particularly attentive” to such developments.
New ECB data last week showed that lending to businesses in the debt-mired eurozone is continuing to contract sharply.
The ECB already flooded eurozone banks with more than US$1,35 trillion in cash via two long-term refinancing operations at the end of 2011 and the beginning of 2012 in a bid to avert a potentially disastrous credit crunch. — AFP.
Online Reporter