ECB Draghi Says EU Rates Lower for Extended Period

European Central Bank (ECB) president Mario Draghi has said eurozone interest rates will stay at 0.15% for an “extended period” of time.

Mr Draghi was speaking after the ECB left rates on hold, a month after it cut them to help economic growth.

In June the bank cut its deposit rate from zero to -0.10% and its benchmark rate from 0.25% to 0.15%.

Mr Draghi added rate decisions would be taken every six weeks from January 2015 instead of monthly.

It also said it would offer long-term loans to commercial banks at cheap rates.

The ECB will also release minutes of the meetings of its General Council – the body which sets interest rates in the eurozone in the same way as the Bank of England’s Monetary Policy Committee – for the first time in January.

Mr Draghi’s comments on interest rates mimic those of Bank of England governor Mark Carney last year, in suggesting a policy of “forward guidance.”

The ECB president said interest rates will remain at their present levels for an “extended period of time in view of the current outlook for inflation”.

He added the ECB was “unanimous in its commitment” to using “unconventional instruments within its mandate”.

June’s cut in interest rates was aimed at encouraging banks to lend more to businesses and boost economic growth.

There had been concerns that the eurozone could slip into deflation, raising fears that consumers might spend even less because they would expect prices to fall in future months.

Figures on Monday showed inflation in the eurozone remained at 0.5% in June – within what Mr Draghi has called “the danger zone” below 1%.

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza