European Central Bank leaves rates on hold in another surprise-free decision

  • European Central Bank leaves monetary policy entirely unchanged at the September meeting of its governing council.
  • Base deposit rate stays at -0.4%, and will remain there until at least next summer, the ECB said.
  • It continues to expect to end its quantitative easing programme by the end of 2018, having tapered purchases from €30 billion per month to €15 billion per month.

The European Central Bank on Thursday left monetary policy in the eurozone unchanged once again, as had been widely expected by financial markets.

That means a base deposit rate of -0.4%, and a quantitative easing program capped at €15 billion per month. Purchases were at €30 billion per month up until the end of September, but the move to the lower figure had been telegraphed for several months.

The ECB remains on track to cease purchasing bonds from the end of 2018, it said, reaffirming its long held stance on the matter.

It also reiterated its stance that interest rates are unlikely to rise until at least next year, saying it “expects the key ECB interest rates to remain at their present levels at least through the summer of 2019.”

At 8.30 a.m. ET (2.30 p.m. CET), ECB President Mario Draghi will speak to journalists about the central bank’s announcements with eyes likely to be on the situation in Italy, which has seen the country’s government clash with the EU over its proposed budget.

Earlier in the week, the EU took the unprecedented step of formally rejecting Italy’s budget, which proposed pushing the country’s budget deficit as high as 2.4% of gross domestic product over the coming years. This means Italy would fall foul of a previously mandated maximum deficit level of 0.8% of GDP.