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ECB holds policy as it launches strategic review

Bank reaffirms pledge to keep rates at rock bottom or even cut them, while also buying bonds at €20bn per month

The European Central Bank (ECB) left its interest policy unchanged and launched a strategic review, its first since 2003, to establish whether its inflation targets still meet goals.

In its first rate decision of the year, the central bank’s governing council voted unanimously to keep the main deposit rate at a historic low of -0.5 per cent, in line with market expectations.

The marginal lending facility remained at 0.25 per cent and the main refinancing operations rate stayed at 0 per cent.

The bank also reaffirmed its pledge to keep rates at rock bottom or even cut them, while also buying bonds at €20bn per month, until inflation in the euro zone went back to its target of just under 2 per cent.

“The governing council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2 per cent within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics,” the ECB said.

The statement was similar to the one in December, suggesting a stabilisation in euro zone economic data had been deemed insufficient to tighten the ECB’s ultra-easy message.

ECB President Christine Lagarde is also to hold a second news conference where she will announce the scope of the bank’s strategic review.

This will last months and span topics from the inflation target to digital money and the fight against climate change.

Further details about the scope and timetable of the review will be published at 15:30pm Central European Time (CET).

FURTHER READING: Investors await first signs of Christine Lagarde’s ECB policy stance

FURTHER READING: Eurozone posts promising figures on inflation and retail sales

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