The European Central Bank has held key interest rates in the first meeting after its president Mario Draghi said the bank would “do whatever it takes” to support the euro.
In its monthly monetary policy meeting, the central bank decided to keep its main interest rate at 0.75 per cent. Speaking at a press conference this afternoon, European Central Bank president Mario Draghi said the bank may revamp its bond-buying programme to support the euro.
However, the lack of concrete action has disappointed, with the markets falling after Draghi failed to resolutely follow through on pledges to “do whatever it takes” to preserve the single currency.
Speaking at the Global Investment Conference in London last week, Draghi said: “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.”
Draghi’s comments prompted speculation that the ECB will restart sovereign bond purchases under its securities market programme, which has not been used for about six months.
Other options that were mooted included granting a banking licence to the European Stability Mechanism rescue fund, embarking on further long-term refinancing operations and starting an official quantitative easing programme.
But some commentators expressed doubt that the ECB would be prepared to take drastic action this month after pointing out that Draghi’s comments appeared to have been made off the cuff.
Meanwhile, the caveat that the bank would act “within its mandate” suggested that any action would be unlikely to depart radically from past measures.
The ECB’s previous move took place in July when it cut the key interest rate from 1 per cent to 0.75 per cent, taking it to a record low for the eurozone.
The central bank has not made a monetary policy change in August since 2006. Indeed, the month’s meeting was skipped before 2006 as a change was so unlikely.