At meetings of the policy committees of the European Central Bank and Bank of England today in London and Frankfurt, benchmark interest rates were kept at historic lows.
At today’s meeting in Frankfurt, the governing council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.05%, 0.30% and -0.20% respectively.
The Bank of England’s Monetary Policy Committee in London at its meeting today voted to maintain key bank rate at 0.5%. The Committee also voted to maintain the stock of purchased assets financed by the issuance of central bank reserves at £375bn i.e. money printing via purchase of bonds
The big focus is on whether recent hints by ECB officials on plans to soon begin a program of purchasing large amounts of sovereign bonds in the market known as quantitative easing (QE) will be confirmed, to boost economic prospects in the single currency area.
In recent weeks Vitor Constâncio, ECB vice president, pointed to the first quarter of 2015 as the likeliest time frame, and most analysts expect the bank to refrain from new stimulus measures Thursday. However, the meeting should clarify how close the ECB is to launching QE.
Mario Draghi, ECB president, said on November 17 at the European Parliament that the bank stands ready to start QE if inflation in the 18-member country Eurozone fails to rise as anticipated. He told the Parliament that the governing council remains unanimous in its commitment to using additional unconventional instruments within its mandate.
In November the annual inflation rate was at 0.3% compared with the central bank’s target of below but close to 2%
This week PMI (purchasing managers' index ) composite index of manufacturing and services showed that Eurozone growth was at a 16-month low.
Webcast of press conference from 1:30 pm Irish time - acccess to Frankfurt has