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ECB Leaves Rates Unchanged, Expects Rate To Remain Steady Longer

The European Central Bank left its key interest rate unchanged on Thursday and now expects interest rates to remain at the present level longer.

The Governing Council, led by ECB President Mario Draghi, left the key interest rates unchanged after the policy session in the Lithuanian capital of Vilnius, as expected.

The main refi rate is currently at a record low zero percent and the deposit rate at -0.40 percent. The marginal lending facility rate is at 0.25 percent.
Eurozone interest rates were raised last in July 2011 by 25 basis points.

The bank changed its forward guidance to reflect that it expects any change to the interest rate only after the first half of next year. Earlier, the bank expected rates to remain unchanged at least through the end of this year.

"The Governing Council now expects the key ECB interest rates to remain at their present levels at least through the first half of 2020, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2 percent over the medium term," the bank said.

The ECB reiterated that it will continue to reinvest the proceeds from maturing securities that it had acquired under its asset purchase programme.

The bank unveiled the terms of its latest targeted longer-term refinancing operations, or TLTRO-III, announced in March.

The Governing Council priced these longer term loans 10 basis points above the average rate in the main refinancing operations.

"For banks whose eligible net lending exceeds a benchmark, the rate applied in TLTRO III will be lower and can be as low as the average interest rate on the deposit facility prevailing over the life of the operation plus 10 basis points," the ECB said.

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