European Central Bank leaves benchmark interest rate unchanged

The European Central Bank announced today that interest rates would remain unchanged "for an extended period of time."

Following a meeting of the ECB's governing council, the Eurozone's central bank revealed that interest rates on refinancing and on lending would remain unchanged at 0 per cent and 0.25 per cent respectively, as was expected by independent economists.

The bank also reiterated that its bond purchasing scheme would remain at its current monthly pace of €30bn until at least the end of September 2018, or until the council had seen a sustained change in inflation towards its target of nearly two per cent.

Read more: Short-term euro interest rates set to remain at "very low levels"

Commenting on the ECB announcement, Nancy Curtin, chief investment officer at Close Brothers Asset Management, said: “Europe remains firmly in a period of growth, but lately weve seen momentum slow significantly.

"While this shouldnt be anything to worry about, its certainly not the right time for a change in monetary policy given benign inflation and relatively weak wage growth.

"Over the coming months well see a reduction in bond buying and its likely that interest rates will remain unchanged until the end of the year as Draghi takes the time to wait and see how growth picks up.”

Read more: Eurozone inflation dips back down to give ECB further cause to pause

Inflation, which has remained weak throughout the Eurozone in spite of the massive bond buying programme, remains one of the ECBs central concerns.

However, in its meeting last week, the governing council emphasised “prudence, patience and persistence in monetary policy,” despite the fact that the region is unlikely to meet the banks inflation target of any time soon.

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CityAM

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