- Jonathan Loynes, chief European economist at Capital Economics
The shared currency lost 0.26% to 1.3497 against the U.S. Dollar, posting just a modest reaction to the ECB rate announcement. At the same time, the Euribor futures slipped meaning analysts still believe European policymakers will pull the trigger soon.
During its February's gathering, Mario Draghi and his team decided to keep the main interest rate, at which the ECB lends to bank at regular loans, at a record-low of 0.25%, keeping it there for four straight months already. The deposit rate also remained unchanged at zero. While the consensus forecast stood for no change in the monetary policy, some analysts were making their bets on another cut in the key refinancing rate. Moreover, economists from Barclays and Deutsche Bank both claimed for a revision of the interest and deposit rates.
In January inflation eased back to 0.7% from 0.8% a month earlier, hitting the level, where it stood in October, when the ECB cut the rate to a fresh low. Despite fears of a persistently weak inflationary pressure, the central bank believes the 18-nation economy is recovering after emerging from the longest-ever recession last summer. Currently, analysts believe the next measure will be either the introduction of the U.S.-style stimulus programme or the implementation of negative deposit rate.
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