FRANKFURT, Germany”•The European Central Bank kept its key interest rates at record lows at its policy meeting on Thursday, as calls grew for president Mario Draghi to shed light on his future stimulus plans.
The ECB’s governing council voted, as expected, to keep the benchmark “refi” refinancing rate at an all-time low of zero percent, a spokesman said.
It also held the rate on its marginal lending facility unchanged at 0.25 percent and the rate on the deposit facility steady at minus 0.40 percent”•meaning banks have to pay to park their excess cash with the ECB.
“The governing council continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time,” the ECB said in a statement.
Policymakers also made no changes to the ECB’s massive 80-billion-euro a month bond-buying scheme designed to encourage spending and investment.
“The governing council confirms that the monthly asset purchases of 80 billion euros are intended to run until the end of March 2017, or beyond, if necessary,” it said.
Attention now turns to Draghi’s press conference, where investors will be looking for clues about the bank’s next stimulus moves following speculation that it may wind down the so-called “quantitative easing” bond-buying scheme.
The ECB strongly denied the “tapering” report but markets were spooked nonetheless.
Faced with sluggish growth and stubbornly low inflation, most analysts actually expect the ECB to extend its bond-buying scheme beyond its March deadline rather than end it.
“The bank remains under pressure to assure markets of its ability to do more,” analyst Jennifer McKeown of Capital Economics said. “Mr Draghi will at least want to allay fears of early tapering of asset purchases,” she added.