ECB maintains ultra-loose monetary policy | Business| Economy and finance news from a German perspective | DW | 27.04.2017
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Business

ECB maintains ultra-loose monetary policy

European Central Bank (ECB) has left key interest rates at historic lows and mass bond-buying unchanged as inflation continues to undershoot its target. But it explicitly acknowledged the vigor of the eurozone economy.

Following a meeting of its rate-setting governing council on Thursday, the Frankfurt, Germany-based institution kept its main refinancing rate at 0.0 percent, the rate on the marginal lending facility at 0.25 percent, and thedeposit rate at minus 0.4 percent - meaning banks have to pay to park money with the central bank.

It also left asset-buying program untouched under which it buys corporate and government bonds worth 60 billion euros ($65.3 billion)a month until December this year.

The bank's interventions are designed to encourage banks to lend to the real economy, powering growth and pushing inflation towards its target of just below 2.0 percent.

But while policymakers, including ECB president Mario Draghi, see a firming recovery in the 19-nation eurozone, inflation fell back to 1.5 percent in March after briefly overshooting the goal in February.

"Incoming data confirms that the cyclical recovery of the euro area economy is becoming increasingly solid and that downside risks have further diminished," Draghi told reporters after the meeting, adding: "At the same time, underlying inflation pressures continue to remain subdued and have yet to show a convincing upwards trend."

However, Draghi also noted there had been a debate among ECB council members over the eurozone growth outlook, with some "more sanguine" than others. That, he added, had resulted in a line being added to his introductory statement which noted that downside risks to the growth outlook "relate predominantly to global factors."

Apparently, governors were anxious not to upset financial markets while eurozone heavyweight France navigates a high-stakes presidential election, which far-right anti-euro candidate Marine Le Pen has a chance of winning.

Now, the subtle tweak in language may be seen by ECB watchers as foreshadowing a more bold change at the next meeting in June, possibly including a removal of a phrase signaling a bias for more monetary policy easing.

uhe/mds (Reuters, AFP)

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