The ECB Just Left Its Interest Rates Unchanged

October 20, 2016, 12:09 PM UTC
A mixed message from a divided institution.
Photograph by Daniel Roland — AFP/Getty Images

The European Central Bank left its official interest rates unchanged for the fifth straight month Thursday, at the latest meeting of its policy-setting governing council.

As expected, the Frankfurt-based ECB left its key discount rate at -0.4%, its refinancing rate at 0% and its marginal lending rate rate at 0.25%. That means that the central bank will continue to charge Eurozone banks for any excess liquidity that they keep on reserve–a policy that is squeezing the profit margins of a sector struggling with both cyclical and structural issues (notably over-capacity).

The ECB also said the governing council reaffirmed the current policy of buying 80 billion euros ($88 billion) of mainly government bonds a month until at least 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.”

The ECB’s target is to keep consumer inflation close to, but below, 2%. It has consistently undershot that target for over three years, due largely to the collapse in oil prices and to the Eurozone’s failure to embrace growth-enhancing reforms. The annual inflation rate edged up to 0.4% in September from 0.2% in August.

ECB President Mario Draghi will hold his regular post-meeting press conference at 0930 Eastern Time.