ECB Keeps European Rates on Hold As Expected

The European Central Bank (ECB) has kept its benchmark interest rate at a record low of 0.25%.

It comes despite the fact that inflation in the currency bloc fell to a five year low in March.

Eurozone interest rates have remained unchanged since November 2013, when the bank said it expected “a prolonged period of low inflation”.

This week figures showed inflation continued to fall in March to 0.5%, well below the ECB’s target of 2%.

March was the 6th month that inflation in the eurzone was trapped in what ECB President Mario Draghi has called “the danger zone” below 1%.

It was also the third month in row in which inflation fell.

The fear attached to lower inflation is it could harm the eurozone’s nascent economic recovery, weakening consumer demand for goods and services as household’s put off spending believing prices will continue to fall.

Low inflation also means that governments and businesses find it more difficult to repay their debts.

via BBC

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.