- Mario Draghi, ECB President
The European Central Bank maintained its interest rates unchanged, while shifted its attention to asset-buying scheme, on which the bank has been pinning hopes to revive the flagging economy. Following the decision to cut rates further last month, the Frankfurt-based bank kept the main refinancing rate at 0.05%, while deposit rate remained in the red territory at –0.20%, which means that banks have to pay to keep funds at the central bank overnight. Mario Draghi, ECB Governor, said that the ECB will begin purchasing covered bonds, which are backed by public sector loans or mortgages and asset-backed securities, which is aimed at flooding cash into the Euro zone economy, later this year. The asset-purchase programme will last at least two years, however, the size of it is still unknown. The bank had already stressed that it would refrain from buying government bonds like other central banks have done. Draghi also highlighted that the bank is committed to embarking on additional unconventional tools in the future in case inflation remains substantially below the central bank's target for too long.
Consumer price inflation in the Euro zone dropped to 0.3% in September, the lowest level for almost five years and well below the ECB's goal of close to, but below, 2%. Draghi said that the recovery is likely to continue to be dampened by a number of factors.
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