The European Central Bank (ECB) has decided to leave its short-term interest rates unchanged. The move may sound surprising considering the situation in Greece, but the reality is that the ECB just cannot take interest rates much lower, as they already have a negative rate policy in place.
The ECB’s Governing Council decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.05%, 0.30% and -0.20%, respectively.
ECB President Mario Draghi’s press conference is where the main points are made in most cases. Draghi said that the ECB is operating right now as though Greece will remain in the euro. The ECB also extended emergency funding for Greek banks. Draghi said that securities purchases are running smoothly and that the central bank’s policy remains highly accommodative.
One issue that stood out was that Draghi said the ECB is ready to use all the instruments available if economic conditions get worse. He also maintained that the ECB flavor of quantitative easing will remain in place; that is, 60 billion euros per month in securities will be purchased until the end of September 2016.
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