European Central Bank keeps interest rates at record low

22 July 2016

The European Central Bank left its key interest rates unchanged at record lows on Thursday as it assesses the impact on the economy of Britain's vote to leave the European Union.

The governing council of the ECB which met today decided to keep the interest rates on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility unchanged at 0.00 per cent, 0.25 per cent and -0.40 per cent, respectively.
The ECB said it expects to keep key ECB interest rates at present or lower levels for an extended period of time, and well past the horizon of the net asset purchases.

The governing council decided to continue the monthly asset purchases of 80 billion until the end of March 2017, or beyond, if necessary, and in any case until it sees a sustained adjustment in the path of inflation consistent with its inflation aim.

ECB President Mario Draghi is expected explain the bank's stimulus programmes for the coming months in his news conference.

The decision comes after June 23 vote by a prominent member to leave the EU, which is widely expected to hurt trade between Britain and the remaining 27 European Union countries since they will have to negotiate new trade rules, a process that will take years.

Europe is enjoying a modest economic recovery, but inflation of 0.1 per cent is abnormally low and unemployment is falling too slowly to make people in countries such as Spain and Greece feel good about the economy.

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