ECB stays pat on monetary policy

Note: This section contains information in English only.
Source: Dukascopy Bank SA
"The governing council is unanimous in its commitment to also using unconventional measures under its mandate should it become necessary" 
-Mario Draghi, ECB Governor 

The European central Bank did not surprise analysts on Thursday, acting in line with expectations. The central bank left the monetary policy unchanged, deciding to allow recently launched measures to work their way through the economy before taking any additional steps in order to prop up growth in the 18-nation region. Thus, Mario Draghi said Eurozone interest rates will remain at 0.15% for an extended period, after cutting the benchmark rate from 0.25% to 0.15% and deposit rate from zero to –0.10% last month. Starting from January 2015 rate decisions will be taken every six weeks instead of monthly to avoid causing excess volatility in the markets. Mario Draghi said that the ECB will not synchronize its meetings with the Fed, which meets eight times a year, usually every six weeks.

However, the ECB officials reiterated its pledge to use unprecedented measures in case the Eurozone's annual rate of inflation will remain sticky for longer than it had projected. Moreover, the central bank has declined calls to embark on large-scale buying of assets in capital markets, also known as quantitative easing, as the central banks in Japan and the U.S. have done. The decision came after the IMF urged the ECB to consider QE to keep inflation from staying too low for too long. Draghi said the central bank would launch a programme of quantitative easing if its outlook for inflation over coming years were lowered. 

© Dukascopy Bank SA

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