The European Central Bank (ECB) have opted to leave rates unchanged until 2020.
The central bank have opted to prolong raising rates, amid concerns over inflation, geo-political uncertainties such as protectionism, as well as vulnerabilities in emerging markets.
In addition, the governing council said it had opted to continue reinvesting the principal payments from maturing securities purchased under the asset purchase programme beyond when it begins to raise interest rates.
Following the announcement of the decision, Mario Draghi, the president of the bank, held a press conference.
In his introductory statement, Draghi outlined the reasons for the council’s decision. He said:
“Today’s monetary policy decisions were taken to provide the monetary accommodation necessary for inflation to remain on a sustained path towards levels that are below, but close to, 2% over the medium term.
Despite the somewhat better than expected data for the first quarter, the most recent information indicates that global headwinds continue to weigh on the euro area outlook. The prolonged presence of uncertainties, related to geopolitical factors, the rising threat of protectionism and vulnerabilities in emerging markets, is leaving its mark on economic sentiment.
At the same time, further employment gains and increasing wages continue to underpin the resilience of the euro area economy and gradually rising inflation. Today’s policy measures ensure that financial conditions will remain very favourable, supporting the euro area expansion, the ongoing build-up of domestic price pressures and, thus, headline inflation developments over the medium term.”
Draghi is set to leave his post at the bank in October later this year, after completing his eight-year term. Draghi has been President of the ECB since 2011.
Prior to this, he served as Chairman of the Financial Stability Board from 2009 to 2011, Governor of the Bank of Italy from 2005 to 2011. He also worked at Wall Street giant, Goldman Sachs.