Tuesday, June 18, 2019

Eurozone interest rates kept on hold

Borrowing costs have been kept on hold in the eurozone, despite a pick-up in inflation in the 19-nation bloc.

The main interest rate remained at 0% and the central bank’s bond-buying programme, aimed at boosting the economy, was also kept unchanged.

The decision comes even though inflation now stands slightly above the central bank’s target of just below 2%.

However, the European Central Bank (ECB) said rates were unlikely to rise until next year at the earliest.

The bank is currently committed to continuing its bond-buying programme until at least December, although the €80bn-a-month quantitative easing (QE) scheme will be trimmed to €60bn a month from April.

But the ECB’s latest statement repeated its stance in January, stating: “The governing council continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time, and well past the horizon of the net asset purchases.”

ECB president Mario Draghi will give further details on the ECB’s decision at a news conference later. Last month, Mr Draghi told the European Parliament: “We should not react to individual data points and short-lived increases in inflation. “Support from our monetary policy measures is still needed.”

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