ECB Keeps Rates on Hold at 0.25 Percent

The European Central Bank (ECB) has kept its benchmark interest rate at a record low of 0.25%.

The decision follows its surprise cut from 0.5% in November.

ECB president Mario Draghi said the decision to keep the rate at its current level reflected the fact that the eurozone’s economy remained “subdued”.

The eurozone – the 17 countries that use the euro currency – grew by 0.1% in the July-to-September period.

This compares with 0.3% growth in the previous quarter.

In a news conference following the announcement, Mr Draghi confirmed the ECB’s forward guidance that the interest rate would remain at the same level or lower for the foreseeable future.

Prices remained “subdued”, he said, despite the recent increase in the eurozone inflation rate from 0.7% to 0.9%.

The ECB has reduced its benchmark interest rate consistently since 2008, when it stood at 3.75%, in response to the region’s sustained debt crisis and contracting economy.

This refinancing rate determines what banks pay to borrow from the ECB and influences borrowing costs for businesses and consumers.

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