FRANKFURT (Reuters) – The European Central Bank left its policy unchanged on Thursday and launched a “strategic review” of its inflation goal and tools.
“The Governing Council…decided to launch a review of the ECB’s monetary policy strategy. Further details about the scope and timetable of the review will be published in a press release today at 15:30 CET,” the ECB said.
It reaffirmed its pledge to keep rates at rock bottom or even cut them, while also buying bonds at 20 billion euros per month, until inflation in the euro zone headed back to its target of just under 2%.
“The Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics,” the ECB said.
The statement was effectively unchanged from December, suggesting a stabilization in euro zone economic data had been deemed insufficient to tighten the ECB’s ultra-easy message.
Attention now turns to Christine Lagarde’s second news conference as ECB president at 1330 GMT, where she will announce the scope of the bank’s strategic review.
This will last months and span topics from the inflation target to digital money and the fight against climate change.
Investors will be looking for clues to whether the review will see Lagarde cement her predecessor’s legacy of monetary largesse, or if she will use it to acknowledge worries that years of easy credit have fueled financial bubbles.
With Thursday’s decision, the ECB’s rate on bank overnight deposits, which is currently its primary interest rate tool, remains at a record low of -0.50%.
The main refinancing rate, which determines the cost of credit in the economy, remained unchanged at 0.00% while the rate on the marginal lending facility — the emergency overnight borrowing rate for banks — stayed at 0.25%.
(Reporting by Francesco Canepa; Editing by Toby Chopra)