Rates Unchanged

ECB Sticks to Its Guns Despite Inflation Rebound

  • Why it matters

    Why it matters

    The European Central Bank’s decision not to change monetary policy will draw the ire from German leaders who are worried about the effect of easy money on banks and savings here.

  • Facts


    • The ECB’s governing council made no changes to its generous stimulus program. It maintained its rate on bank overnight deposits at -0.40 percent and its main refinancing rate at 0.00 percent.
    • The ECB has faced growing pressure from German leaders to rein in its unprecedented bond purchasing program, but the central bank on Thursday resisted such calls.
    • Mario Draghi, the ECB’s president, defended Germany against accusations of being a currency manipulator and sent the euro rallying by defending the single-currency union.
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European Central Bank President Mario Draghi Announces Interest Rate Decision
The president of the European Central Bank is unimpressed by calls for change from Germany. Picture source: dpa

The European Central Bank has confirmed economists’ expectations by keeping its monetary policy stance unchanged. But a rise in inflation and growing dissatisfaction with the ECB’s unprecedented stimulus program in Germany will only increase the pressure on the central bankers to change course at their next meeting on April 27.

Irked by multiple extensions to the ECB’s generous bond-buying program and the effects of its rock-bottom interest rates on banks, insurers and savers, German economists and politicians have stepped forward in the past few weeks to call for adjustments.

European central bankers have so far been undeterred by the Germany-led complaints and, in a widely-expected move Thursday, decided to keep the ECB’s rate main refinancing rate at a record low of 0 percent. Their separate rate on overnight bank deposits, which has become the ECB’s primary interest rate tool in the past couple years as a means of forcing banks to lend out their reserve cash, was also kept unchanged in negative territory at -0.40 percent.

The ECB also withheld any changes to its controversial asset-buying program, vowing to maintain stimulus policy at least until the end of the year.

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