ECB leaves rates unchanged at 2%, as expected

The European Central Bank, at its meeting in Florence, left the deposit rate unchanged at 2 per cent. The main refinancing rate remains at 2.15 per cent, the marginal lending rate at 2.40 per cent. This was announced by the ECB, which is keeping rates at the 2 per cent level reached last June, after having cut them by two percentage points in eight cuts in one year.

Inflation, it is emphasised, remains close to the 2% medium-term objective and the Governing Council's assessment of the inflation outlook remains broadly unchanged. The Governing Council acknowledges that "the economy has continued to grow despite the difficult global environment" with "the strength of the labour market, the solidity of private sector balance sheets and past interest rate reductions decided by the Governing Council" remaining "important factors underpinning the resilience of the economy". The Governing Council also acknowledges that "the economy has continued to grow despite the difficult global environment" with "the strength of the labour market, the solidity of private sector balance sheets and past interest rate reductions decided by the Governing Council" remaining "important factors underpinning the resilience of the economy"

"However," the note continues, "the outlook is still uncertain, mainly due to the ongoing global trade disputes and geopolitical tensions."The Governing Council "is determined to ensure that inflation stabilises at its medium-term target of 2 per cent. To define the appropriate monetary policy stance, the Governing Council will follow a data-driven approach whereby decisions are taken on a case-by-case basis at each meeting. In particular, the Governing Council's interest rate decisions will be based on an assessment of the inflation outlook and associated risks, given new economic and financial data, as well as the dynamics of core inflation and the intensity of monetary policy transmission, without tying itself to a particular rate path."

The ECB's securities portfolios through past purchase programmes (App and Pepp) 'are shrinking at a measured and predictable pace', notes the European central bank, pointing out that the Eurosystem no longer reinvests the capital repaid on maturing securities.

The Eurozone's GDP growth in the third quarter reflects 'a strong boost from tourism on services', furthermore 'many companies have accelerated their digitisation efforts'. However, 'the global situation remains a burden' and 'new export orders indicate further declines', said ECB President Christine Lagarde during the press conference following the Florence meeting.