–Focus Turns To Trichet Press Conference Starting at 12:30 GMT
FRANKFURT (MNI) – The European Central Bank’s Governing Council
decided at its monthly monetary policy meeting Thursday to leave its key
interest rate unchanged, the ECB announced.
The bank said its key refinancing rate would thus remain at 1.0%,
where it has been since a 25-point cut that was decided at the Council’s
May 7, 2009 meeting.
In more normal times, the refi — or minimum bid — rate would be
the lowest rate at which banks could seek ECB financing in competitive
bidding at the ECB’s main weekly refinancing operations. For now and
until further notice, it is the rate at which those refinancing
agreements are fixed for all bidders.
The ECB left the deposit rate — which is the floor for euro money
market rates — at 0.25%, and the marginal lending rate — which is the
ceiling — at 1.75%.
Monetary officials have said repeatedly in recent weeks and months
that interest rates remain appropriate and that they do not see
inflationary risks. On that basis, market expectations of anything but
unchanged short-term borrowing costs were virtually zero prior to the
decision.
Markets this morning were pricing in some 60 basis points of
short-term market interest rate increases over the next 12 months as the
special liquidity measures implemented by authorities expire and
liquidity is thus drained from the system.
However, with market rates currently still yet further away from
the present ECB refi rate, that implies that the ECB is not seen moving
before April 2011.
The next policy-making Governing Council meeting is scheduled for
May 6 in Lisbon.
–Frankfurt bureau tel: +49-69-720-142. Email: dbarwick@marketnews.com
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