AFP, Frankfurt :
The European Central Bank left interest rates at historic lows and mass bond-buying plans unchanged Thursday, leaving observers to search for hints from president Mario Draghi on when it will wind down the flood of cash.
The ECB’s governing council-made up of the 19 eurozone central bank governors and six board members-voted to keep its headline “refi” rate at 0.0 percent and the deposit facility rate at minus 0.4 percent-meaning banks have to pay to park their excess cash with the ECB.
With inflation close to the bank’s target, critics’ calls have grown louder for the ECB to raise rates and wind down its tens of billions of euros per month in government and corporate bond purchases.
Policies designed to boost growth and thereby inflation are no longer needed, opponents argue, and could be harmful if not revised.
All eyes will now be on ECB president Mario Draghi as he addresses reporters in a regular press conference from 1330 GMT.
Natixis bank economist Alan Lemangnen said “we expect Mario Draghi to recall that conditions for a durable adjustment of inflation are not gathered yet,” leaving the bank committed to its present course of low rates and bond purchases.
The ECB launched its “quantitative easing” mass bond-buying programme in early 2015 after a scare over deflation-a self-sustaining downward trend in prices and wages.
Some two years into the scheme, most economists agree that risk has receded.
Inflation in the single currency area stood at 2.0 percent in February, Eurostat figures showed last week, the first time since 2013 it has outstripped the ECB’s mandate of “close to, but below 2.0 percent”.
Many analysts expect new ECB staff forecasts to include predictions of higher inflation across the whole year for 2017 — perhaps as high as 1.8 percent, just shy of the target.
But in January, Draghi said increased inflation would have to be consistent across the euro area, independent of the ECB’s support, not temporary, and foreseeable into the medium term for the bank to consider it “durable”.
The European Central Bank left interest rates at historic lows and mass bond-buying plans unchanged Thursday, leaving observers to search for hints from president Mario Draghi on when it will wind down the flood of cash.
The ECB’s governing council-made up of the 19 eurozone central bank governors and six board members-voted to keep its headline “refi” rate at 0.0 percent and the deposit facility rate at minus 0.4 percent-meaning banks have to pay to park their excess cash with the ECB.
With inflation close to the bank’s target, critics’ calls have grown louder for the ECB to raise rates and wind down its tens of billions of euros per month in government and corporate bond purchases.
Policies designed to boost growth and thereby inflation are no longer needed, opponents argue, and could be harmful if not revised.
All eyes will now be on ECB president Mario Draghi as he addresses reporters in a regular press conference from 1330 GMT.
Natixis bank economist Alan Lemangnen said “we expect Mario Draghi to recall that conditions for a durable adjustment of inflation are not gathered yet,” leaving the bank committed to its present course of low rates and bond purchases.
The ECB launched its “quantitative easing” mass bond-buying programme in early 2015 after a scare over deflation-a self-sustaining downward trend in prices and wages.
Some two years into the scheme, most economists agree that risk has receded.
Inflation in the single currency area stood at 2.0 percent in February, Eurostat figures showed last week, the first time since 2013 it has outstripped the ECB’s mandate of “close to, but below 2.0 percent”.
Many analysts expect new ECB staff forecasts to include predictions of higher inflation across the whole year for 2017 — perhaps as high as 1.8 percent, just shy of the target.
But in January, Draghi said increased inflation would have to be consistent across the euro area, independent of the ECB’s support, not temporary, and foreseeable into the medium term for the bank to consider it “durable”.
