THE European Central Bank today maintained its benchmark interest rate at a record-low 0pc and said this was likely to continue until mid-2020 in what ECB President Mario Draghi called a prudent move to protect Europe from “the threat of rising protectionism.”
Analysts said the ECB’s decision reflects concerns over the developing trade war between the United States and China and its potential to undermine the Eurozone’s own international trading prospects.
“The Governing Council now expects the key ECB interest rates to remain at their present levels at least through the first half of 2020, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2% over the medium term,” Draghi told a press conference in Vilnius, Lithuania.
Earlier this year the ECB had signalled it was likely to raise interest rates by the end of 2019. But Draghi said ECB governors had been forced to reassess this judgment given US-China trade tensions, the continued uncertainty about the timing and terms of Brexit, and “more generally the uncertainty about global trade growth.”
Draghi said the decision to postpone any rate hike to 2020 “takes into account the prolongation of uncertainty with respect to what we saw and believed in March … most specifically the threat of rising protectionism.”