European Central Bank (ECB) held on Thursday the key monetary policy interest rate at record low of 0.75%, a decision expected by analysts, who are waiting for the speech of the ECB President, Mario Draghi. The decision was made at a meeting in Ljubljana, Slovenia.
ECB lowered the key rate in early July by 0.25 percentage points, from 1% to 0.75%, and reduced the deposit rate to zero, both indicators reaching historic lows.
“The Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.75%, 1.5% and 0%,” it reads a statement posted Thursday on its website.
The low key interest rate is providing a stimulus to the eurozone economy, however, ECB officials are uncertain about the effect of a further drop of the rate.
The Bank of England also held Thursday the monetary policy rate at a record low of 0.5% and kept the asset purchase program amount to 375 billion pounds.
Analysts had expected the ECB’s decision to maintain interest at the same level and look for clues in Draghi’s speech on the availability of the institution to act to support the eurozone economy and the cost of borrowing member states under pressure in financial markets.
The unlimited purchase of bonds of troubled eurozone countries, a program announced by the ECB in September, is conditioned by accessing the eurozone emergency fund and meeting strict conditions, including austerity measures and reforms.
Spain and, to a lesser extent, Italy are both under pressure on international financial markets for emergency fund help so that the ECB could intervene to reduce costs to governments’ borrowing. Leaders in Madrid and Rome are reluctant to seek external financial assistance because of conditions for austerity measures, and external monitoring to achieve them.
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