The ECB left its benchmark Minimum Bid Rate unchanged at 0.05% yesterday as was widely anticipated. The central bank will begin an aggressive asset purchasing program in the hopes that it can restore the Eurozone's flagging economy and avoid deflation in the process.
After the rate release, ECB Governor Mario Draghi commented on the state of the Eurozone economy at the press conference, saying, "The ECB has first of all lowered interest rates so much that now we are close to zero and can't go down any lower, and as I said no other great central bank is now having banks pay for depositing money with the central bank."
"Second, we have injected unprecedented amounts of liquidity into the system. Third, we just approved now another series of measures. Fourth, we have successfully fought a crisis of systemic proportions in 2012 which actually led to lowering all the interest rates on various components. So I find the description of the ECB as the guilty actor here, it needs to be corrected."
In addition, Draghi noted that, "Our asset purchases should ease the monetary policy stance more broadly. They should also strengthen our forward guidance on the key ECB interest rates and reinforce the fact that there are significant and increasing differences in the monetary policy cycle between major advanced economies." And that, "Together with a series of targeted longer-term refinancing operations, otherwise called TLTROs, to be conducted until June 2016, (ABS and covered bonds) purchases will have a sizable impact on our balance sheet."
Authored by Orbex.com.