ECB Leaves Rates Unchanged As Expected
(RTTNews) - The European Central Bank held its key interest rates steady on Thursday, in line with expectations, as policymakers assessed that price pressures continue to ease, but acknowledged that the economic environment remains highly uncertain mainly due to the trade tariff wars.
The Governing Council, led by ECB President Christine Lagarde, kept the deposit rate unchanged at 2.00 percent. The refinancing rate was retained at 2.15 percent and the marginal lending rate at 2.40 percent.
The previous change in euro area interest rates was a 25-basis point reduction in June. The bank had cut interest rates by a quarter basis points each in every rate-setting session since September. The ECB said that the euro area economy has so far proven resilient in a challenging global environment, which still is exceptionally uncertain, mainly because of trade disputes.
"The Governing Council is determined to ensure that inflation stabilizes at its 2 percent target in the medium term," the bank said. "It will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance."
"The Governing Council is not pre-committing to a particular rate path," the bank reiterated.
Given the current situation when Eurozone inflation is 2 percent and is likely to hover around this for some time, ING economist Carsten Brzeski said the ECB can simply wait for who is holding the better trade cards and whether actual inflation will really behave as predicted.
"Still, with two more weaker inflation prints and hard macro data weaker than soft data over the summer, we can still see one final rate cut at the September meeting," the economist added.
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