ECB holds rates; markets on edge on Europe QE hopes
European Central Bank President Mario Draghi has announced the central bank to an expanded 60 billion euro ($70 billion) private and public bond-buying program until September 2016.
The ECB kept its main interest rate unchanged on Thursday. It kept its main refinancing rate at 0.05 percent, with the rate on its marginal lending facility at 0.30 percent. The rate on its deposit facility was held at -0.20 percent.
A QE program would be designed in the hope of boosting the region’s painfully low inflation, which came in at an annual minus 0.2 percent in December.
QE has already been implemented by other major central banks, such as the U.S. Federal Reserve, the Bank of Japan and the Bank of England, in order to stimulate their economies.
The ECB has already instigated “extraordinary” policy measures to stimulate the euro zone, including programs to purchase covered bonds and asset-backed securities. However, inflation has remained very weak, and at previous press conferences, Draghi had signaled his willingness to instigate still more stimulatory measures.
Policymakers and corporate leaders gathered at this week’s World Economic Forum in Davos, Switzerland were broadly positive about the prospect of QE by the ECB.
“We support them in accommodative monetary policy. This is a must… If you look at the economic outlook, it is very weak,” Zhu Min, the deputy managing director of the International Monetary Fund, told CNBC on Thursday.