JAKARTA (TheInsiderStories) – The European Central Bank (ECB) left its key interest rate unchanged in the governors meeting today (26/04) amid the global economy turmoils.
The interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00 percent, 0.25 percent and -0.40 percent respectively.
ECB President Mario Draghi expects the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases.
The Governing Council also confirms that the net asset purchases, at the current monthly pace of €30 billion, are intended to run until the end of September 2018, or beyond if necessary, and in any case until the centarl bank sees a sustained adjustment in the path of inflation consistent with its inflation aim.
“We continue to expect interest rates to remain at their present levels for an extended period of time, and well past the horizon of our net asset purchases,” Draghi told reporters at the central bank office in Frankfurt.
He said, following several quarters of higher than expected growth, incoming information since our March meeting points towards some moderation, while remaining consistent with a solid and broad-based expansion of the euro area economy.
Draghi stated: “The underlying strength of the euro area economy continues to support our confidence that inflation will converge toward our inflation aim of below but close to 2% over the medium term. Underlying inflation remains subdued and has yet to show convincing signs of a sustained upward trend.”
Furthermore, he said, the Governing Council will continue to monitor developments in the exchange rate and other financial conditions with regard to their possible implications for the inflation outlook.
An ample degree of monetary stimulus remains necessary for underlying inflation pressures to continue to build up, Draghi says. According to him, continued monetary support is provided by the net purchases, the size-able stock of assets, the ongoing and forthcoming reinvestments, and by forward guidance on rates.
Based on ECB assessment, the risks surrounding the euro area growth outlook remain broadly balanced, but risks related to global factors, including the threat of increased protectionism, have become more prominent.
For that, Draghi said, the implementation of structural reforms in euro area countries needs to be substantially stepped up. Improving the functioning of economic and monetary union remains a priority are needed.
“The Governing Council urges specific and decisive steps to complete the banking union and the capital markets union. All Governing Council members reported on the situation of their own countries,” said Draghi.
Commenting on the U.S economy, Draghi saw the yield increase was to be expected for two reasons: different position in the business cycle of U.S economy and recent measures concerning fiscal expansion.
“What is known that recent events [regarding protectionism] have a profound and rapid effect on business and exporters’s confidence and that in turn can effect the growth outlook,” He said.
At the same time, President Donald Trump’s administration reported the durable-good orders climbed to 2.6 percent in March from a month earlier 3.5 percent. Otherwise, U.S. initial jobless claims dropped to the lowest level since 1969 from 24,000 to 209,000 in April 21, after an unchanged 233,000 previously.
What the meaning for the investors in the contradictory data shown by the two continents? investors should be cautious in investing because in our observations the global economic turmoil is still continuing.