ECB holds rates, Draghi to announce further measures

The European Central Bank kept interest rates unchanged at record lows and said President Mario Draghi will announce further policy measures at a media briefing later.

The Governing Council left the main refinancing rate at 0.05 per cent, a decision predicted by all 48 economists in a Bloomberg News survey.

The deposit rate remained at minus 0.2 per cent and the marginal lending rate at 0.3 percent.

At about 2:30pm in Frankfurt, Draghi will probably commit to a quantitative-easing program that may exceed €1 trillion.

The ECB’s arrival at this point, three months after the Federal Reserve ended its own QE, marks a critical juncture in the history of the currency and the European unity it embodies.

“QE in Europe is like trying to push on a piece of string, there’s nothing to push against,” Anne Richards, chief investment officer at Aberdeen Asset Management Plc, said at the World Economic Forum in Davos.

“Until France and Italy, and to a lesser extent Germany, wake up to the fact that we’ve got to do something on the political front and got to really target structural reforms, we’ll be sitting here in 12 months’ time wondering why QE failed.”

Bloomberg