ECB leaves key rates unchanged in January, as expected
|At its first monetary policy meeting of the year, the Governing Council of the European Central Bank (ECB) decided to leave the interest rates on its main refinancing operations and the interest rates on the marginal lending facility and the deposit facility unchanged at 0.00%, 0.25% and -0.50%, respectively.
Market reaction
The EUR/USD pair moved little in reaction to the policy announcements and held on its gains near the top end of its weekly trading range, around mid-1.2100s. The focus remains on the post-meeting press conference, where comments by the ECB President Christine Lagarde would certainty infuse some volatility around the euro pairs.
Key takeaways from the policy statement
- ECB expects the key rates to remain at their present or lower levels until inflation outlook robustly converge to a level sufficiently close to, but below, 2%.
- ECB will continue the purchases under the pandemic emergency purchase programme (PEPP) with a total envelope of €1.85 trillion.
- The purchases under the PEPP will be conducted to preserve favourable financing conditions over the pandemic period.
- The envelope can be recalibrated if required to maintain favourable financing conditions to help counter the negative pandemic shock to the path of inflation.
- ECB stands ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner.
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