ECB keeps easy policy unchanged amid spreading global gloom

FRANKFURT (Reuters): The European Central Bank (ECB) kept its ultra-easy monetary policy unchanged as expected yesterday, giving recent stimulus measures time to work their way into the economy and counter spreading global gloom.

Mario Draghi, President of the European Central Bank (ECB) holds a news conference on the outcome of the Governing Council meeting at the ECB headquarters in Frankfurt, Germany April 10, 2019. REUTERS

With economic powerhouse Germany skirting a recession, the ECB has already backtracked on plans to tighten policy but may be reluctant to do more as the root causes of the downturn – weak demand from abroad and political turmoil – are largely beyond its policy reach.

Highlighting the abundance of global turbulence, US President Donald Trump threatened on Tuesday to impose tariffs on $ 11 billion worth of EU products, opening a new chapter in his global trade war that is certain to dent confidence further.

The International Monetary Fund warned overnight that the global economy is slowing more than expected and a sharp downturn could require world leaders to coordinate stimulus measures.

For its part, the ECB has already gone to extraordinary lengths and promised yesterday to keep interest rates at record low at least through this year.“The Governing Council expects the key ECB interest rates to remain at their present levels at least through the end of 2019, and in any case for as long as necessary,” the bank said in a statement.

With yesterday’s decision, the ECB’s deposit rate, currently its primary interest rate tool, remains at -0.40% while the main refinancing rate stands at 0.00%.