6th June 2019
European Central Bank maintains record low interest rates
President of the European Central Bank (ECB), Mario Draghi, has confirmed in a press conference today that the decision has been made to keep interest rates on hold at their record low levels until at least mid-2020. While the ECB raised its forecast for growth this year from the previous forecast in March, it lowered the forecast for growth in 2020. Similarly, they raised their inflation expectations for this year, but lowered them for next year. These were only minor tweaks, based on the ECB’s view that global headwinds continue to weigh on the outlook for the euro area. Mr Draghi cited key risks as being geopolitical uncertainties, rising protectionism and vulnerabilities in emerging markets. Despite the news, the euro rose by 0.5 per cent against the dollar following the announcement, indicating that the market wanted more drastic action, such as restarting quantitative easing, to support the eurozone and decrease the likelihood of entering into a recession.