MNI POLICY: ECB Leaves Policy Unchanged as Draghi Bows Out

By Luke Heighton

     FRANKFURT (MNI) - The European Central Bank left its monetary policy

settings unchanged on Thursday, as Mario Draghi was due to step down as

president after eight years at the end of this month. 

     The interest rates on the main refinancing operations, the marginal lending

facility the deposit facility remained unchanged at 0.00%, 0.25% and -0.50%

respectively. 

     The Governing Council reiterated that it expects key ECB interest rates to

remain "at their present or lower levels until it has seen the inflation outlook

robustly converge to a level sufficiently close to, but below, 2% within its

projection horizon, and such convergence has been consistently reflected in

underlying inflation dynamics." 

     Net purchases will be restarted under the Governing Council's asset

purchase programme (APP) at a monthly pace of E20 billion from Nov. 1, when

Christine Lagarde formally takes over as head of the ECB, and are still expected

to "run for as long as necessary," before ending "shortly before" the ECB begins

raising rates. 

     Principal payments from maturing securities purchased under the APP will be

reinvested, in full, for an extended period of time past the date when it starts

raising the key ECB interest rates, "and in any case for as long as necessary to

maintain favourable liquidity conditions and an ample degree of monetary

accommodation," the Governing Council said in a statement.

--MNI Frankfurt Bureau; +49-69-720-146; email: luke.heighton@marketnews.com

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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