ECB holds despite the economic risks unchanged rate

The key rate remains at a record low, as the Council of the European Central Bank (ECB) decided on Thursday in Frankfurt. Banks thus receive fresh money from the Central Bank to continue the zero rate. Savers have to be patient, however, still, some economists are expecting in view of the increasing risks to the economy now that the ECB will wait with the first increase in interest rates up to the year 2020.

As the Outlook for the economy deteriorated: International trade, conflicts of brakes in the world trade, China's economic growth last year fell to the lowest level in almost three decades, in Europe, a disorderly exit of great Britain from the European Union.

With a view on the European economy, the ECB President, Mario Draghi said this in the past week in the EU Parliament in Strasbourg as a "slowdown, not is heading for a recession, but it could take longer than initially expected".

Economists were least sceptical: "Given the subdued cyclical dynamics of the basic price pressure in the European economy should remain weak. This is likely to delay the efforts of the ECB to monetary policy normality, or even nip it in the Bud."

penal interest rate of 0.4%

In fact, Inflation in the Euro area weakened in December, The consumer prices according to Eurostat calculations, by 1.6 percent above the level of the previous month. Thus, the inflation rate fell to the lowest level since April. The European Central Bank (ECB) is aiming in the medium term, an inflation rate of just below 2.0 percent.

This value is considered to be far enough away from the zero mark. Permanently low or even falling prices, could bring businesses and consumers, investment, to postpone - to put a brake on the economy. With their flood of money the ECB, the economic situation in the 19 Euro countries, wants to help on the jumps and inflation heating up.

Fresh billions in government and corporate bonds, does not want to put the ECB for the time being. However, the funds from spout to be securities to invest for the time being. Since the beginning of the bond purchases in March 2015 until the end of 2018, the ECB has purchased securities in the amount of about 2.6 trillion euros. The penal interest rate to the banks at the ECB parked money need to pay, left the Central Bank on Thursday at 0.4 percent. (Dec/sda)

Created: 24.01.2019, 14:46 PM