The European Central Bank left interest rates at their record low of 0.0 percent after their monthly meeting on Thursday.
The ECB chose to keep interest rates at their current level after saying that it expects the headline inflation rate to be “fairly volatile” in the coming months. ECB chief Mario Draghi said the central bank needs to remain persistent, patient and prudent, adding that the quantitive easing programme would continue “for some time”.
Kerim Derhalli, chief executive of Invstr, said of the announcement: “While the possibility of an unlikely interest rate hike is slowly growing, it’s no surprise that Mario Draghi has opted to keep European Central Bank rates unchanged for now.
“Despite some evidence that monetary stimulus has been working, the fact that inflation in the eurozone slipped back to 1.3 percent in June suggests that a change now would be unwise.
“Draghi will have also been mindful of the market overreaction to his speech in Sintra, which saw a surge in bond yields and the euro.”
According to today’s announcement, Eurozone banks will still be charged 0.4 percent to leave money at the ECB instead of lending it, and banks will be charged 0.25 percent on money borrowed from the ECB.
The bank’s quantitive easing and low interest rates were designed to fend off deflation. Inflation stood at 1.3 percent in June, higher than expected but still below the bank’s target of 2 percent.