The European Central Bank (ECB) has not changed its interest rates and incentive program, despite the strong euro.
The European Central Bank announced today (Thursday) that the euro has not changed interest rates and the coronavirus incentive program, although it exerts stronger pressure on policymakers. According to the statement made, the policy rate was left unchanged at zero, deposit interest at -0.50% and marginal funding rate at 0.25%.
The euro, closely monitored by the central bank, has risen over 5% against the dollar since the beginning of July and traded around $ 1,1846 just after the decision. A stronger currency makes imports cheaper, hits eurozone exporters and tightens fiscal conditions for the wider economy.
ECB Won’t Take A Step For Now
The events of the past month have raised questions about whether the European Central Bank will need to do more to restore the euro economy. The ECB has decided not to take a big step for now. ECB’s main refinancing operations, marginal lending facility and deposit loan interest rate remained unchanged at 0.00%, 0.25% and -0.50%, respectively. The bank’s Pandemic Emergency Procurement Program also stood at a total level of 1.35 trillion Euros ($ 1.6 trillion).
In its statement, the ECB used the following statements:
“These purchases contribute to the relaxation of the overall monetary policy stance and thus help offset the downside impact of the pandemic on the projected inflation path.”
European Central Bank (ECB) President Christine Lagarde also made a press release after the meeting. Chairman Lagarde stated that the data coming in since July point to a recovery.
What Awaited Investors?
Analysts and investors predicted that if a negative result came out of the meeting, it would benefit gold and Bitcoin (BTC) and the stock markets would fall. Apart from this, there was an expectation in the markets that there would be no change in the deposit rate before the decision.