Valletta (AFP) – The European Central Bank held its key interest rate steady on Thursday, a spokesman said, as speculation grew that it could take additional policy measures to counter chronically weak inflation in the euro area.
The ECB’s governing council voted, as expected, to keep the benchmark “refi” refinancing rate at its current all-time low of 0.05 percent, the spokesman said.
Analysts say the strong euro, falling consumer prices and fears of a global economic slowdown provide ample argument for the ECB to ease monetary conditions still further in the 19 countries that share the euro.
ECB President Mario Draghi is scheduled to explain the reasoning behind the decision to hold rates steady at his traditional post-meeting news conference.
But ECB watchers believe the guardian of the euro will intervene only verbally this time round, but pave the way for concrete policy action later this year.
Markets have begun to speculate that the ECB could accelerate or increase soon its programme of so-called quantitative easing (QE), given that consumer prices declined by 0.1 percent in the euro area in September.
In March, the ECB embarked on a scheme of sovereign bond purchases — more than 1.0 trillion euros in all at a rate of 60 billion euros per month — to bring inflation back up to levels that are more conducive to healthy economic growth.
While falling prices might appear to be good for consumers, they can be poisonous to the economy, because they may persuade households to delay purchases in the hope of lower prices, in turn prompting companies to hold off investment and hiring.
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Source: businessinsider.com
ECB holds key rate steady as weak inflation concerns grow
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