
ECB Holds Rates Steady; Needs More Time To Assess Brexit Impact
The European Central Bank left key interest rates unchanged today in its first decision since the U.K.'s vote to leave the European Union rocked markets.
The benchmark interest rate was left at 0% and the deposit rate remained at minus 0.40%.
The ECB said it expects interest rates to remain at "present or lower levels for an extended period of time, and well past the horizon of the net asset purchases.
The asset purchase program will remain at €80 billion ($88 billion) and is intended to run until the end of March 2017 "or beyond, if necessary, and in any case until it sees a sustained adjustment in the path of inflation consistent with its inflation aim."
ECB President Mario Draghi said eurozone markets have weathered the shock from Brexit well.
But he warned, "Given prevailing uncertainties, the Governing Council will continue to monitor economic and financial market developments very closely and to safeguard the pass-through of its accommodative monetary policy to the real economy."
He added, "Over the coming months, when we have more information, including new staff projections, we will be in a better position to reassess the underlying macroeconomic conditions, the most likely paths of inflation and growth, and the distribution of risks around those paths. If warranted to achieve its objective, the Governing Council will act by using all the instruments available within its mandate."
Draghi reiterated the statement several times throughout the press conference.
He added that due to the lack of information about the impact of Brexit and other geopolitical events no specific monetary policy instruments were discussed.
The euro surged while Draghi spoke but has since pared gains and was recently down 0.18% at $1.0995.
The Dax was recently up 0.13% at 10,155.52 in Frankfurt. In Paris, the Cac 40 was at 4,374.19 at 0.34% and the FTSE 100 was down 0.27% at 6,711.09.
On Tuesday, the International Monetary Fund cut its eurozone growth forecasts due to increased uncertainty as a result of the Brexit vote. The IMF cut growth estimates for the U.K. by 0.9 of a percentage point to 1.3% and for Germany by 0.4 of a percentage point to 1.2% for 2017.
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