ECB Trims Rates, Plans To End QE At End Of 2018

Frankfurt (June 14)  The European Central Bank’s Governing Council Thursday left interest rates unchanged but policymakers announced that they envision ending the bond-buying program, which is referred to as quantitative easing, at the end of 2018.

The rates on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain 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 that the evolution of inflation remains aligned with the current expectations of a sustained adjustment path,” said a policy statement from the ECB.

Meanwhile, the ECB reiterated its past statement that net asset purchases, at the current monthly pace of €30 billion, will continue run until the end of September.

However, policymakers also said that after that date, “subject to incoming data confirming the Governing Council’s medium-term inflation outlook, the monthly pace of the net asset purchases will be reduced to €15 billion until the end of December 2018 and that net purchases will then end.”

The ECB also said it intends to maintain its policy of reinvesting the principal payments from maturing securities purchased for “an extended period of time” after the end of the net asset purchases.

ECB President Mario Draghi is scheduled to hold a news conference Thursday.

KitcoNews