12/01/2012
By Matt Ritchie
Interest rates on the main refinancing operations, the marginal lending facility and the deposit facility will remain unchanged at 1.00, 1.75 and 0.25 per cent, respectively, following a meeting of the governing council of the European Central Bank today.
The ECB has announced that rates will remain at present levels, following the 25 basis point decreases on 3 November and 8 December 2011.
Addressing the press following the announcement, ECB president Mario Draghi said information that has become available since early December “broadly confirms” the bank’s previous assessment.
“Inflation is likely to stay above 2 per cent for several months to come, before declining to below 2 per cent. At the same time, the underlying pace of monetary expansion remains moderate. As expected, ongoing financial market tensions continue to dampen economic activity in the euro area, while, according to some recent survey indicators, there are tentative signs of a stabilisation in activity at low levels,” Draghi said.
In an environment where the economic outlook remains subject to high uncertainty and substantial downside risks, cost, wage and price pressures in the euro area should remain modest and inflation rates should develop in line with price stability over the policy-relevant horizon, Draghi said.
A “very thorough” analysis of all incoming data and developments was required in the period ahead.
“Overall, it is essential for monetary policy to maintain price stability over the medium term, thereby ensuring a firm anchoring of inflation expectations in the euro area in line with our aim of maintaining inflation rates below, but close to, 2 per cent over the medium term. Such anchoring is a prerequisite for monetary policy to make its contribution towards supporting economic growth and job creation in the euro area.”
Other stories you may find of interest:
European investors expect EU inflation to remain
Inflation in the Eurozone will be well above 2% in five years’ time, according to 36% of 52 large European institutional investors surveyed by ING Investment Management
Inflation worrying European pension funds
European pension funds are more concerned about inflation than they were last year, and many are taking steps to protect their assets, according to a survey by consultancy firm Mercer
China outlook 2011
In 2011, the biggest opportunity for the economy is if China changes legislation in order to allow land ownership licenses to be traded, said Chris Ruffle, portfolio manager at Martin Currie
