ECB holds rate steady as expected

  • Reuters, Frankfurt
  • |
  • Updated: Jul 05, 2013 02:45 IST

The European Central Bank will keep interest rates at record lows for an extended period and could yet cut them further, the bank’s chief, Mario Draghi, said on Thursday.

Less than two hours hour after the Bank of England gave a steer about future interest rate moves at Mark Carney’s debut policy meeting as governor, the ECB president adopted the same tactic.

“The Governing Council expects the key ECB rates to remain at present or lower levels for an extended period of time,” Draghi told a news conference after the ECB left interest rates at 0.5%, emphasising that this was the first time that the ECB had done so.

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He added that the council had discussed cutting rates but decided against and said the bank could also consider cutting the deposit rate on bank deposits at the ECB - already at zero - in an attempt to foster more lending.

The pound fell to a one-month low against the dollar and British government bond yields fell sharply after the BoE moved to push back expectations of when it might eventually raise rates.

 

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