- ECB Leaves Rate Unchanged at Zero Percent
The European Central Bank on Thursday left interest rates unchanged at 0.00 percent record low.
According to the Governing Council, key interest rates are expected to remain at current levels for an extended period and well past the horizon of the net asset purchases.
However, the apex bank announced it would cut down on its monthly asset purchase program starting from January 2018 to 30 billion euros from 60 billion euros as widely expected. This, the bank expects to maintain until the end of September 2018 or beyond, depending on economic condition in the region.
“If the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the Governing Council stands ready to increase the Asset Purchasing Program in terms of size and/or duration,” ECB stated in the Monetary Policy report released on Thursday.
Mario Draghi, the President of the European Central Bank has repeatedly said the inflation rate, 1.5 percent, is below the bank’s 2 percent target and predicts to remain just below 2 percent till late 2019.
This, experts attributed to sluggish wage growth amid record low unemployment rate and improved economic outlook that has raised concern on factors subduing price pressures even though demand is on the rise and labour market is at almost full employment.
Draghi, during the press conference said the reduction in asset purchase program is due to broad-based growth and increased job creation in the Euro-area, however, weak price pressures and uncertainty remains a concern.
The region is on track to grow at the fastest pace in a decade this year.
The Euro single currency declined across board after the report, plunging 0.52 percent against the US dollar to $1.1754, and 0.1 percent against the much weaker U.K. pound.