The European Central Bank on Thursday kept the benchmark interest rate on the main refinancing operations at 0.75 percent. This was not a surprise from the ECB as the only few individual analysts and economists had expected a reduction in European interest rates.
On the other hand, the monetary policy decision of the Council was noted by the currency market and the subsequent comments from ECB chief executive Mario Draghi pushed further to the already strengthening of the euro at the expense of both the dollar and yen.
Draghi pointed out at the press conference after the rate decision, growth in the euro region in the short term will be weak, but the ECB sees a gradual recovery thereafter. Inflation, however is not too high. 2 percent this year, after which price increases will slow, says ECB's assessment.
On the other hand Mario Draghi believes, the central bank's Monetary Outright Transaction program with the announced purchase of government securities has already stabilized bond yields in debt-ridden southern European countries. This is despite the fact that the program has not yet started.
Euro Thursday afternoon cost 1.2980 dollar and 101.95 yen. Wednesday, the corresponding rates are 1.2905 dollar and 101.35 yen.
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