The ECB keeps record low rate again

At yesterday's meeting, the Governing Council of the European Central Bank (ECB) kept the benchmark interest rate at a record low zero level. The base rate has been at zero since March 2016.

Interest rates on margin loans and deposits also remained unchanged at 0.25% and minus 0.5%, respectively. 

The Governing Council expects key interest rates to remain at their current or lower levels until inflation reaches 2%. It is worth noting that in early July, the ECB adjusted its medium-term inflation target to exactly 2% from the previous wording «just below 2%».

Analyzing the actions of the European central bank, experts note that such a policy is caused by the fact that the European economy has not yet fully recovered after the crisis.

Since inflationary processes prevail in the EU countries, in order to maintain aggregate supply and demand, the eurozone maintains a negative real rate, which is calculated as the key rate minus inflation. According to experts, the stabilizing monetary policy of the eurozone countries has always been characterized by its softness and the position of creating «cheap» money.