ECB keeps rates unchanged at record low as expected

Friday, 3 June 2016 00:00 - - {{hitsCtrl.values.hits}}

Reuters: The European Central Bank left interest rates unchanged as expected on Thursday, holding them at record lows as it prints money to lift the economy and raise inflation.

The decision to leave rates on hold was unanimously expected by the 65 analysts polled by Reuters after the ECB cut its deposit rate deeper into negative territory in March, decided to buy corporate bonds and unveiled a new ultra-cheap corporate loan scheme.

The bank added that it will start buying corporate bonds on 8 June.

Many of the March measures, like the corporate debt buys and the cheap loans, called targeted longer-term refinancing operations, have yet to be implemented however, suggesting that the ECB will want to wait, perhaps until the autumn, to gauge how its past measures are taking effect.

With inflation hovering around zero, well short of the bank’s 2% objective, the ECB has repeatedly eased policy, providing extensive stimulus to prop up the euro zone economy.

At Thursday’s meeting, held in Vienna, the ECB kept its rate on bank overnight deposits, now seen as its primary interest rate tool, at -0.40%.

The main refinancing rate, which determines the cost of credit in the economy was unchanged at 0.00% while the rate on the marginal lending facility – or emergency overnight borrowing rate for banks – remains at 0.25%.