Despite “Mini-inflation”: ECB leaves key rate at a record-low – Tagesspiegel

The European Central Bank (ECB) will not worsen its course despite the ongoing Mini-inflation for the time being. In the interest of the Governing Council had at its meeting on Thursday in Frankfurt everything as it was, and the massive bond purchase program is initially not extended. The central bank reiterated that the purchases will be maintained until at least March 2017th The interest rate at which commercial banks can obtain fresh central bank money to remain at a record low of zero percent. Parking banks extra money at the ECB, they have to continue to pay 0.4 percent penalty interest.

Until March 2017, the ECB wants unchanged stuck month 80 billion euros in government bonds and other securities, total 1.74 trillion euros. Good one trillion is invested. Since June this year corporate bonds are on the shopping list. The cheap money to stimulate the economy and promote the sustained low inflation back towards the ECB’s target of just below 2.0 percent. Because long-term low or even falling prices are a risk for the economy: businesses and consumers could postpone investments because they expect that it will be even cheaper. In August, the annual inflation in the euro area was a mere 0.2 percent.

The economy digested the Proposed referendum on United Kingdom membership of the European Union-shock better than expected

Therefore, had many economists expect that the Fed reloading already at its September meeting and the bond purchase program will be further extended by half a year. However, the mini-inflation explains in large part to the low price of oil. In addition: The economy digested the Proposed referendum on United Kingdom membership of the European Union-shock better than expected. On June 23, the British had a majority advocated that their country leaves the European Union. The exact exit process is still open. The British No to EU worry for economic headwind, ECB President Mario Draghi had said at the last Governing Council meeting in late July.

However, it is “too early to assess the medium-term impact of the Proposed referendum on United Kingdom membership of the European Union”. The ECB monetary policy is already extremely extended. Critics doubt that further action would still use something. The States would finally bring necessary reforms on the way. Especially from Germany there were last again a lot of criticism in the course of the central bank.

Ex-Bundesbank President Axel Weber ruled the many cheap money does not reach the desired goal. The President of the Financial BaFin, Felix Hufeld, expressed concern: “For the banking sector is the current pause in interest rate to a menacing drought more and more.” He warned: “The felt eternal low interest rates makes the earnings base of institutions slowly but surely erode.” Many savers get long hardly interest. (AP)