ECB keeps eurozone interest rates unchanged

Mario DraghiImage copyright

The European Central Bank has kept its interest rates and economic stimulus programme unchanged, with attention now switching to its latest forecasts for clues to future policy direction.

Its main interest rate for countries in the eurozone remains at zero.

The bank’s asset purchase programme will drop from €60bn to €30bn a month in January, as announced in October.

Pressure on the ECB to tighten policy has been growing as the eurozone economy has gathered strength.

ECB president Mario Draghi will hold a news conference later where he will discuss the reasons behind the bank’s latest decision.

Analysts will be scrutinising the bank’s latest forecasts for growth and inflation for clues as to when it might take further steps to rein in its stimulus measures.

In September, the European Central Bank raised its economic growth forecast for the eurozone to 2.2% this year, the fastest rate for 10 years.

The revival in the eurozone’s fortunes was underlined by a closely-watched survey published earlier on Thursday, which indicated that businesses in the 19-nation bloc have been enjoying strong growth this month.

The latest IHS Markit purchasing managers’ index (PMI) of private businesses hit 58, its highest reading since February 2011. A figure above 50 indicates growth.

“It’s a solid picture of broad-based expansion,” said Chris Williamson, chief business economist at IHS Markit.

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