The European Central Bank (ECB) on Thursday, July 25, expectedly did not change its base interest rates. The base rate on loans remains at a record low of 0.0 percent, the ECB said in Frankfurt am Main, Germany, Reuters reported. This figure has been maintained since March 2016.
The rate on deposits also remains unchanged - at minus 0.4 percent. Thus, banks must continue to pay the regulator 0.4 percent per annum, if they intend to keep excess funds in the ECB. For the first time, the ECB introduced a minus rate on deposits in 2014.
At the same time, the ECB changed its forecast and now expects key rates to remain at the current or lower level at least until the end of the first half of 2020 or until inflation returns to the level of two percent targeted by the financial regulator. As noted, in June the inflation rate was 1.3 percent.
In addition, the Governing Council of the European Central Bank instructed the competent authorities to study various options for supporting the European economy, including changing the forecast for rates, introducing a multi-level system for calculating rates on bank deposits, and the possibility of updating the bond buyback program, which ended in December 2018 d. The ECB hopes that the low deposit rate will stimulate banks to provide loans and, accordingly, will stimulate economic growth.
The head of the ECB Mario Draghi said after the meeting that the central bank "intends to act " to prevent a threat to the economies of 19 member countries of the eurozone due to a slowdown in the global economy and extremely low inflation. At the same time, he noted that the issue of reducing the rate was not discussed at the last meeting of the ECB Council. As noted by the dpa agency, analysts predict that among the measures aimed at reviving the economy, the ECB may go to reduce interest on deposits from minus 0.4 to minus 0.5 percent.
