ECB keeps interest rates unchanged, as widely expected

The European Central Bank (ECB) kept its monetary policy unchanged as expected on Thursday, maintaining the key deposit rate at -0.40%.

The main refinancing rate, which determines the cost of credit in the economy, remained unchanged at 0.00% while the rate on the marginal lending facility (the emergency overnight borrowing rate for banks) was held steady at 0.25%.

The central bank also made no change to its policy guidance, first formulated in June and kept broadly unchanged through the balance of this year. But, the Governing Council enhanced its forward guidance on reinvestment.

However, the ECB confirmed that the QE programme will be halted this month, even with the recent growth indicators showing that the expansion is running out of steam and risks to the outlook are mounting.

Attention now turns to the ECB President Mario Draghi’s 1330 GMT press conference, at which he is likely to discuss the broader economic outlook, in light of Italy’s budget fight with the European Commission and growing risks to the Euro area economy of a disorderly Brexit.