ECB holds key rate, cuts inflation forecast

ECB holds key rate, cuts inflation forecast

The ECB has left its key interest rates and bond-purchase stimulus program unchanged.

The central bank left its benchmark short-term interest rate at zero, and its deposit rate at negative 0.4%, both record lows.

The decision was announced after a meeting Thursday of the bank’s 25-member governing council in Frankfurt.

The bond purchases are set to run at 60 billion euros (US$72 billion) per month through the end of the year, and longer if needed to raise inflation from the current 1.5% toward the bank’s goal of just under 2%.

The ECB also lowered its forecasts for inflation — to 1.2% next year from 1.3% previously and to 1.5% in 2019 from 1.6%. However, it raised its economic growth forecast this year to 2.2% from 1.9% previously.

A stronger euro can hurt eurozone exports and lower inflation which the ECB is trying to raise through its 60 billion euros ($72 billion) per month in bond purchases.

 

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