ECB decision currently: key interest rates in basement at least until mid-2020 ; longer bond reinvestments

The ECB decision has just been announced.

The key ECB interest rate (refinancing rate) remains unchanged at 0.00%.

The extremely important bank deposit rate, which banks refer to for negative interest rates, also remains unchanged at -0.40%.

The marginal lending facility also remains unchanged at 0.25%.

Important statement: The key ECB interest rates remain “at least beyond the first half of 2020” in the basement. The reflows from maturing bonds are also to be reinvested for longer! TLTRO: The ECB is currently making concrete statements on this. See last paragraph of the quick report.

At 2:30pm german time the extremely important Press Conference of Mario Draghi follows. We will then report on all current statements immediately. Here is the official statement of the ECB on the current decision:

1)The Governing Council of the ECB now assumes that the key ECB interest rates will remain at their current level at least beyond the first half of 2020 and in any case for as long as necessary in order to ensure that inflation continues to converge sustainably to below but close to 2% in the medium term.

2) The Governing Council of the ECB intends to fully reinvest the redemption amounts of the securities purchased under the asset purchase programme beyond the time when it starts raising key interest rates and in any event as long as necessary at maturity. This will be done in order to maintain favourable liquidity conditions and extensive monetary accommodation.

3) Regarding the modalities of the new series of quarterly targeted longer-term refinancing operations (TLTRO III), the Governing Council of the ECB decided that the interest rate on each operation would be set at a level 10 basis points above the average interest rate on the main refinancing operations of the Eurosystem during the lifetime of the respective TLTRO. For banks whose eligible net lending exceeds a reference level, the interest rate on TLTRO III will be lower and may be as low as the average interest rate on the deposit facility for the duration of the operation plus 10 basis points.

Headquarter of the ECB in Frankfurt. Photo: ECB
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