Draghi Stuck to Easing Tone Despite German

ECB President Mario Draghi kept borrowing costs at rock bottom levels on Thursday, sticking to his course of ultra-loose monetary policy in spite of a barrage of German criticism of his recipe for tackling the euro zone’s economic malaise.

Having yet to implement or fully explain some of the measures he announced last month, Draghi is set to give investors more information about the European Central Bank’s latest plan to buy corporate bonds.

Ahead a press conference at 1230 GMT, the ECB announced that it would keep its main refinancing operations rate — setting the price for banks to borrow — at zero while it will continue to charge them 0.4 percent for parking money at the ECB.

Having launched a 1.7 trillion euro ($1.93 trillion) money-printing scheme and offered to pay banks to borrow from it to urge them to lend, the ECB will maintain a holding pattern for now.

Its biggest headache may be a nasty spat with Berlin after Finance Minister Wolfgang Schaeuble said its policies were causing “extraordinary” problems for Germany and were in part to blame for the rise of the right-wing anti-immigration Alternative for Germany (AfD).

Late on Wednesday, Schaeuble stuck to this tough line, saying that “a long period with zero and negative interest rates is not a sensible situation”.

via Reuters

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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