DEC 2019: ECB Keeps Rates Unchanged

Posted on 12/12/2019

Christine Lagarde held a press conference as the new President of the European Central Bank (ECB). The ECB decided to keep the key ECB interests rates unchanged. On November 1, 2019, the ECB reengaged net purchases under its asset purchase programme (APP) at a monthly pace of €20 billion. The ECB expects to run the program as long as necessary to reinforce the accommodative impact of their policy rates, and to end shortly before we start raising the key ECB interest rates. In addition, the ECB plans 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 the bank will start raising the key ECB interest rates.

In her press release she stated, ” In the light of the subdued inflation outlook, the Governing Council reiterated the need for monetary policy to remain highly accommodative for a prolonged period of time to support underlying inflation pressures and headline inflation developments over the medium term. We will, therefore, closely monitor inflation developments and the impact of the unfolding monetary policy measures on the economy. Our forward guidance will ensure that financial conditions adjust in accordance with changes to the inflation outlook. In any case, the Governing Council continues to stand ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner, in line with its commitment to symmetry.”

Lagarde was Managing Director of the International Monetary Fund, between July 2011 and November 2019.

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