ECB Draghi Says EU Rates Lower for Extended Period

European Central Bank (ECB) president Mario Draghi has said eurozone interest rates will stay at 0.15% for an “extended period” of time.

Mr Draghi was speaking after the ECB left rates on hold, a month after it cut them to help economic growth.

In June the bank cut its deposit rate from zero to -0.10% and its benchmark rate from 0.25% to 0.15%.

Mr Draghi added rate decisions would be taken every six weeks from January 2015 instead of monthly.

It also said it would offer long-term loans to commercial banks at cheap rates.

The ECB will also release minutes of the meetings of its General Council – the body which sets interest rates in the eurozone in the same way as the Bank of England’s Monetary Policy Committee – for the first time in January.

Mr Draghi’s comments on interest rates mimic those of Bank of England governor Mark Carney last year, in suggesting a policy of “forward guidance.”

The ECB president said interest rates will remain at their present levels for an “extended period of time in view of the current outlook for inflation”.

He added the ECB was “unanimous in its commitment” to using “unconventional instruments within its mandate”.

June’s cut in interest rates was aimed at encouraging banks to lend more to businesses and boost economic growth.

There had been concerns that the eurozone could slip into deflation, raising fears that consumers might spend even less because they would expect prices to fall in future months.

Figures on Monday showed inflation in the eurozone remained at 0.5% in June – within what Mr Draghi has called “the danger zone” below 1%.

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.