ECB Keeps Interest Rates, Asset Purchases Unchanged

The European Central Bank on Thursday left its key interest rates and the size of asset purchases unchanged, as expected, and reiterated that it stands ready to make adjustments to its tools when needed.

The main refi rate was retained at a record low zero and the deposit rate was kept at -0.50 percent, in line with economists' expectations.

The lending rate was left unchanged at 0.25 percent.

"The Governing Council continues to stand ready to adjust all of its instruments, as appropriate," the bank reiterated.

Confirming its forward guidance on interest rates, the ECB said the Governing Council expects the key interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2 percent within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.

The size of the pandemic emergency purchase programme (PEPP) was left unchanged at EUR 1,350 billion.

"These purchases contribute to easing the overall monetary policy stance, thereby helping to offset the pandemic-related downward shift in the projected path of inflation...," the central bank said.

"This allows the Governing Council to effectively stave off risks to the smooth transmission of monetary policy."

Asset purchases under the PEPP will continue until at least the end of June 2021 or when the bank assess that the coronavirus crisis is over, the ECB said.

The future roll-off of the PEPP portfolio will be managed to avoid interference with the appropriate monetary policy stance, the central bank added.

Further, the bank said the net purchases under the asset purchase programme (APP) will continue at a monthly pace of EUR 20 billion, together with the purchases under the additional EUR 120 billion temporary envelope until the end of the year. 

The Governing Council will also continue to provide ample liquidity through its refinancing operations, the bank said.

ECB President Christine Lagarde is set to hold her post-decision press conference at 08:30 AM ET, during which she is set to unveil the latest set of ECB staff macroeconomic projections.