European Central Bank leaves policy on hold as it winds down to its summer break

Cameron Spencer/Getty Images

  • The European Central Bank left monetary policy unchanged at its July meeting.
  • This was widely expected, with most analysts forecasting little change in the last meeting before the central bank’s summer break.
  • Quantitative easing in the eurozone will end at the end of 2018, the ECB reaffirmed.

LONDON – The European Central Bank left its monetary policy entirely unchanged at the July meeting of its governing council on Thursday, as had been expected.

That means a base deposit rate of -0.4%, and a quantitative easing program of €30 billion per month – a figure that will be reduced to 15 billion euros per month from September as the bank winds down its bond buying. The ECB will cease purchasing bonds from the end of 2018.

The bank continued, however, to hint that an interest-rate hike could be on the way in the next year or so.

“The Governing Council expects the key ECB interest rates to remain at their present levels at least through the summer of 2019,” it said in a statement, adding “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.”

This assessment was corroborated by President Mario Draghi during a press conference after the decision, in which he had a positive view of the eurozone economy.

“While uncertainties, notably related to the global trade environment, remain prominent, the information available since our last monetary policy meeting indicates that the euro area economy is proceeding along a solid and broad-based growth path,” he told reporters at the ECB’s Frankfurt headquarters

The meeting was always expected to be uneventful, with economists unanimous in their beliefs that policy would be unchanged. July’s meeting is the last before the central bank’s extended summer break, and is traditionally lacking in any significant action.

“As expected, today’s meeting yielded little new information with regards to the policy outlook following last month’s forward guidance update,” Andrew Wilson, CEO of Goldman Sachs Asset Management Europe, said in an email.

The euro was little moved on the decision, reflecting the fact that it was in line with market expectations.

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