ECB holds rates at 0% and keeps its forward guidance unchanged
The European Central Bank (ECB) kept rates unchanged on Thursday, in what marked President Mario Draghi’s last monetary policy meeting before Christine Lagarde takes over.
Lower growth
The euro zone is seeing lower growth – in part held back by global trade tensions, a weaker manufacturing sector, and other economic uncertainties, such as Brexit.
The current ECB deposit rate is -0.5%, the lowest on record. We’ll leave the debate on negative rates for another time – but it’s not good and the jury’s out.
QE
The ECB reiterated Thursday that the second round of QE will start on 1st November at a monthly amount of 20 billion euros ($22.3 billion) per month.
Mario Draghi also warned that there’s growing political pressure on central banks and that this impacts any attempt at effective monetary policy. In the U.S., for example, President Donald Trump has often criticised the Federal Reserve chairman for not lowering interest rates at a quicker pace.
U.S. next
Next central bank interest rate decision comes from the U.S. when the Federal Reserve makes its decision next week.