ECB leaves interest rates unchanged at its October meeting

The European Central Bank left interest rates on hold and kept its 1.74 trillion euro ($1.95 trillion) asset buying scheme running in order to boost economic growth and inflation at its October monetary policy meeting on Thursday. As analysts predicted, the benchmark overnight deposit interest rate was left unchanged at -0.40%; however, the majority of them expect the Bank to announce an extension of asset purchases at the Governing Council meeting in December. Furthermore, the Central bank said it continues to expect the key interest rates to remain at present or even lower levels for an extended period of time, and well past the horizon of the net asset purchases. It also noted that the 80 billion euro asset purchase program is intended to run until March 2017, or beyond, if necessary to raise inflation. Back in September, inflation reached its highest level since 2014, albeit that level was just 0.4%, and according to the latest forecasts released by the ECB it is unlikely to hit its close to 2% target until the end of 2018 or early 2019. The ECB, in response to weak growth, low inflation and high unemployment, was forced to provide additional monetary stimulus, cutting interest rates into the negative territory and launching its QE program.