The European Central Bank kept interest rates unchanged and will end its asset purchase program this month, but warned of "continuing confidence with increasing caution."
Announcing the outcome of a meeting of the central bank's governing council, President Mario Draghi said the €15 billion ($17.1 billion) asset purchase program will end. The ECB had previously announced its intention to end its program, which had already reduced from monthly net asset purchases of €30 billion in October.
Mr. Draghi added that the bank is also enhancing its forward guidance on reinvestment of these assets. "Accordingly, we intend to continue reinvesting, in full, the principal payments from maturing securities purchased under the (asset purchase program) for an extended period of time past the date when we start raising the key ECB interest rates, and in any case for as long as necessary to maintain favorable liquidity conditions and an ample degree of monetary accommodation," Mr. Draghi said.
The interest rate on the main refinancing operations of the eurosystem will remain at zero; the marginal lending facility was kept at 0.25%; and the interest rate on the deposit facility will stay at -0.4%.
Mr. Draghi summarized the feeling of the governing council as "continuing confidence with increasing caution."
He cited weaker data, geopolitical uncertainty, emerging markets vulnerability, financial markets volatility and the "threat of protectionism" as specific factors contributing to uncertainty and caution, but added that "all these may change."
"The overall atmosphere has become one characterized by generalized uncertainty," Mr. Draghi said.
