The European Central Bank left interest rates and the terms of its asset purchase program unchanged, following the latest meeting of its governing council.
The interest rates on the main refinancing operations of the eurosystem — which provides the bulk of liquidity to the banking system — stays at zero. The marginal lending facility — providing overnight credit to banks from the eurosystem — remains at 0.25%; and the interest rate on the deposit facility, which banks may use to make overnight deposits, holds steady at -0.4%.
In a statement on its website, the ECB said its 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.”
The ECB's asset purchase program, of monthly purchases of €80 billion ($89.2 billion), will continue to the end of March 2017, or beyond if necessary, “and in any case until it sees a sustained adjustment in the path of inflation consistent with its inflation aim.”
At a press conference following the announcement, Mario Draghi, president of the ECB, addressed questions regarding increased calls for fiscal stimulus. He cited a statement by the Group of 20 leaders from its most recent meeting in Hangzhou, China, on Sept. 4-5, which said: “We are determined to use all policy tools — monetary, fiscal and structural — individually and collectively to achieve our goal of strong, sustainable, balanced and inclusive growth. Monetary policy will continue to support economic activity and ensure price stability, consistent with central banks’ mandates, but monetary policy alone cannot lead to balance growth.”
Mr. Draghi said: “It is something I have been saying now for months, that to reap the full benefits of an extraordinarily accommodative monetary policy, one needs other policies,” he said.
Mr. Draghi also defended the central bank’s monetary policy measures. He pointed out the improvements that have been made in markets. “I don’t want to go through the list of financial variables … that have improved dramatically since the beginning of our non-conventional monetary policies, but one thing … that probably matters most: while in the previous time we had observed fragmentation, and we had observed very subdued credit developments, nowadays we can safely say the fragmentation is over. That credit is growing constantly and has been growing constantly since the beginning of 2014, month after month.”
