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ECB Leaves Rates Unchanged, Ends Bond-Buying Program

Kitco News

(Kitco News- The European Central Bank left interest rates unchanged Thursday and reaffirmed plans to end its asset-purchase program (APP) known as quantitative easing this month, but said it will reinvest proceeds from maturing securities for an “extended time” even after interest rates start rising.

Both moves were expected, with the central-bank having previously signaled bond purchases would stop at the end of 2018.

The ECB’s Governing Council left the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility at 0.00%, 0.25% and minus 0.40%, respectively.

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

While saying asset purchases would end this month, the Governing Council also said the ECB is “enhancing its forward guidance” on reinvestment.

“Accordingly, the Governing Council intends to continue reinvesting, in full, the principal payments from maturing securities purchased under the APP for an extended period of time past the date when it starts raising the key ECB interest rates, and in any case for as long as necessary to maintain favorable liquidity conditions and an ample degree of monetary accommodation,” the ECB said.

ECB President Mario Draghi is scheduled to hold a news conference later this morning.

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