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Eurozone interest rates left unchanged ECB to leave interest rates low for 'extended period'
(about 1 hour later)
The European Central Bank (ECB) has kept eurozone interest rates unchanged following its latest meeting. The European Central Bank (ECB) president, Mario Draghi, says that eurozone interest rates will remain low for an extended period.
The bank left its key interest rate unchanged at 0.05%, as expected. Mr Draghi also said they could fall to even lower levels.
The overnight deposit rate was left at -0.3%. At the ECB meeting in December, this rate had been cut from -0.2% in an attempt to push banks to lend instead of parking money at the ECB. His comments followed the ECB's regular meeting at which it kept rates unchanged at a barely perceptible 0.05% in the face of near-zero inflation.
The overnight deposit rate was left at -0.3%. At the ECB meeting in December, this rate had been cut from -0.2%.
That move was an attempt to push banks to lend instead of parking money at the ECB.
He told a news conference: "As we start the new year, downside risks have increased again amid heightened uncertainty about emerging market economies' growth prospects, volatility in financial and commodity markets and geopolitical risks."
He said that that could make it necessary to review - and possibly reconsider - monetary policy at the next meeting in early March.
That meeting will have a new set of ECB macroeconomic projections to work with.
Mr Draghi said that the recent falls in the oil price meant that inflation was likely to be "significantly lower" compared with the outlook in early December.
In December, the ECB had also extended its monthly €60bn stimulus programme by six months to March 2017.In December, the ECB had also extended its monthly €60bn stimulus programme by six months to March 2017.
ECB president Mario Draghi will hold a news conference to discuss the bank's decision at 13:30 GMT.
There is speculation that the ECB will have to step up its attempts to stimulate the eurozone economy later this year.There is speculation that the ECB will have to step up its attempts to stimulate the eurozone economy later this year.
Inflation in the eurozone is currently at 0.2% - well short of the ECB's target of close to, but below, 2%.Inflation in the eurozone is currently at 0.2% - well short of the ECB's target of close to, but below, 2%.
Eurozone inflation was below zero - that is, prices were falling - as recently as September, mainly due to falls in international energy prices, particularly crude oil.Eurozone inflation was below zero - that is, prices were falling - as recently as September, mainly due to falls in international energy prices, particularly crude oil.
In December, Mr Draghi said that eurozone inflation was expected to reach 1% in 2016. However, the ECB's forecasts were based on the assumption of oil prices averaging more than $50 a barrel this year, and oil is currently below $30.In December, Mr Draghi said that eurozone inflation was expected to reach 1% in 2016. However, the ECB's forecasts were based on the assumption of oil prices averaging more than $50 a barrel this year, and oil is currently below $30.