ECB keeps policy unchanged

By BLOOMBERG

MADRID • European Central Bank (ECB) officials reiterated their pledge to keep interest rates at record lows, giving themselves time to assess prospects for the euro-area’s weakened economy as it confronts new risks.

Five weeks after presenting a new long-term lending programme, the ECB held off announcing more details in its policy statement yesterday.

Uncertainties from global trade continue to cloud the region’s outlook, and the Governing Council may wait until June before deciding on how much stimulus will be needed.

President Mario Draghi is set to hold a media briefing, where the focus will be on the Governing Council’s assessment of the risks to the economic outlook. The ECB has predicted a growth pick-up in the second half, but that scenario is being challenged by continuously weak numbers that also contributed to a downward revision of the International Monetary Fund’s global outlook this week.

New threats of US import tariffs and wrestling over the terms of the UK’s departure from the European Union are weighing on sentiment. More details about the state of the US economy will be revealed when the minutes of the US Federal Reserve’s March 19-20 policy meeting are published.

Many of Europe’s domestic woes are concentrated in Germany’s industrial sector, but momentum is also slowing in other large economies. Euroarea expansion may cool to 1.2% this year from 1.8% in 2018 as well.

A discussion about mitigating the side effects of negative interest rates has grown louder in recent weeks, after banks warned that the policy may harm rather than help lending. — Bloomberg