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The European Central Bank (ECB) kept the key rate unchanged in the eurozone on Thursday afternoon. In the press release, the central bank reiterated the message of the previous monetary policy meeting that interest rates will remain unchanged until the summer of 2019 – and longer if necessary.
Chief Economist Kjersti Haugland in DNB Markets was not surprised by the message from the Central Bank
– The ECB does not bring any change to its word but repeats the big news from the June monetary policy meeting: fourth quarter, says Haugland.
- The ECB began buying securities on the markets, also called quantitative easing, in March 2015.
- Initially, the program provided for the purchase of state bonds in the zone. euro for 60 billion euros each month. In March 2016, the program was extended to 80 billion euros each month.
- In April 2017, the program was reduced to 60 billion euros before being further reduced to 30 billion in December.
- The goal is to reduce interest rates on longer-term loans. Management rates mainly control changes in the shortest market rates. By buying a longer-term debt, the central bank is pushing interest rates on public debt, corporate debt and mortgages to a lower level than it normally applies by using interest rates. Traditional interest.
She said the big news was not expected before this interest rate meeting after a very exciting monetary meeting in June, when Draghi released the cat from the bag and announced the end of securities purchases.
There were only marginal fluctuations in the euro following the interest rate decision.
The ECB changed course in June
Since March 2015, the ECB has made major securities purchases to revive the economy and reduce interest rates on loans. long term.
At the June monetary policy meeting, it became clear that monthly securities purchases were cut in half by the end of September and will be settled before the end of the year.
In June, the central bank determined that interest rates should remain unchanged throughout the summer of 2019, which allowed for an interpretation. Some believe this means that the interest rate can arrive as early as July, while others believe it means September.
Mario Draghi is expected to be questioned about this during the press conference on Thursday afternoon.
Thursday, by the way, exactly six years ago, Mario Draghi made his famous speech where he said that the ECB was ready to do anything to save the euro cooperation. (Conditions)
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