December 10th local time, the European Central Bank, headquartered in Frankfurt, Germany, held a regular meeting to announce the interest rate resolution and the latest monetary policy.
As the market had previously generally expected, the European Central Bank decided to keep the key interest rates in the euro area unchanged, namely, the main refinancing rate, the overnight loan rate and the overnight deposit rate of 0.0%, 0.25% and -0.5%, respectively.
At the same time, the emergency asset purchase plan in response to the coronavirus epidemic will be expanded from 135 million euros to 1.85 trillion euros, and the maturity of debt purchase will be extended, that is, the debt purchase will last until at least March 2022.
In addition, the European Central Bank will add long-term refinancing operations and further relax the guarantee requirements for this low-cost loan to ensure that credit flows to businesses and households.
At a press conference held later that day, European Central Bank President Lagarde pointed out that the current economic development of eurozone countries is different.
Although the industrial recovery has improved, a series of blockade measures introduced by the government to prevent the epidemic have hit the service industry hard.
She believes that aid measures at the EU level are particularly important given the huge spatial differences in the performance of fiscal policies. Therefore, Lagarde called on EU leaders to quickly implement the Recovery Fund to help countries seriously affected by the epidemic.
Lagarde stressed that the coronavirus epidemic will continue to pose a serious threat to global public health and the economy, including the euro zone, and even good news in the field of vaccines cannot change this situation in the short term.
It is worth mentioning that the European Central Bank also lowered its growth forecast for the euro area economy next year from 5.0% to 3.9% on the same day.
Speaking of the eurozone inflation rate, which has been far below the European Central Bank’s target of “close to but below 2%”, Lagarde said that the negative impact of the coronavirus on inflation cannot be underestimated, and the European Central Bank will continue to make every effort to maintain price stability and hope that demand can recover.
She concluded her press conference by revealing that the next meeting of the ECB’s Management Committee will be held on January 21, 2021.