- Draghi keeps rates on hold as the market expected.
- Many hints towards monetary easing in the future.
- Draghi will not be hiking rates during his tenure as ECB President.
The ECB today held rates flat as issues with Eurozone data kept the Governing Council dovish.
The Governing Council’s statement was as follows:
At today’s meeting the Governing Council of the European Central Bank (ECB) decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. The Governing Council expects the key ECB interest rates to remain at their present or lower levels at least through the first half of 2020, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to its aim over the medium term.
With German business confidence floundering for July, it is probably the right decision to remain flat at this time.
Draghi did go further, however, and expressed a desire for added stimulus in the future.
More key, though, was the mentioning of a change in fiscal policy from individual states.
Regarding fiscal policies, the mildly expansionary euro area fiscal stance is providing support to economic activity. At the same time, countries where government debt is high need to continue rebuilding fiscal buffers. All countries should reinforce their efforts to achieve a more growth-friendly composition of public finances.
The market is likely to have taken this as a signpost that the ECB is admitting its monetary policy over the last decade has failed to spur growth, alongside it having been a rather dovish press conference, since EURUSD ended up flat on the day after an initial spike.
You can read the official statement here.