The European Central Bank is committed to an ultra-low interest rate - zero percent

The European Central Bank (ECB) is sticking to its policy in the face of the third wave of the Coronavirus pandemic. The monetary watchdog on central bank chief Christine Lagarde decided on Thursday in its interest rate meeting that there is no new stimulus for monetary policy. However, they offered the possibility of adapting all of their tools if needed. The European Central Bank had only decided in March to significantly increase the frequency of its bond purchases as part of its PEPP contingency program. By doing this, you want to ensure that financing costs for businesses, states, and households remain low during the coronavirus crisis.

The central bank left the key interest rate at a record low of 0.0 percent. It has been there since March 2016. Nor has it rocked its deposit interest rate, which is minus 0.5%. This means that financial institutions should continue to pay fines interest if they withhold excess funds at the central bank.

The European Central Bank is supporting the Eurozone economy during the Coronavirus crisis with a variety of monetary policy measures. The most important weapon in fighting the economic consequences of the pandemic is the PEPP bond purchase program, which includes government bonds, corporate bonds and other stocks. It has already been crossed twice and the purchase limit is € 1.85 trillion. Transactions are expected to continue until the end of March 2022 at least. In addition, the central bank issued very cheap long-term credit injections to banks.

Economists expect Central Bank President Lagarde to argue at the afternoon press conference that the European Central Bank should maintain its loose trajectory. Because an early exit from the crisis could jeopardize the economic recovery. She chooses a picture of a patient emerging from an acute crisis, but still relying on crutches. Controversy has already erupted over the appropriate time for a somewhat less lax monetary policy. Some board members had recently considered the possibility of halting emergency bond purchases from the third quarter, should the economy turn into a strong recovery path in the second half of the year.

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