The ECB is maintaining  its main interest rate at zero, as it has done since 2016, it announced on Thursday. This policy should be used to refinance banks in the short term, so that states, businesses and households can continue to borrow, in order to stimulate investment.

In addition, institutions that lend enough money will be able to benefit from the ECB at a base rate lower than that of the deposit rate, per AFP, which says that the latter, maintained at -0.5%, is at an all-time low.

The bank’s governing council also confirmed its pandemic emergency purchase programme, totalling €1,850b, usable by March 2022, “until it judges that the coronavirus crisis phase is over”. 

This sum could be readjusted, the ECB explains, “if required to maintain favourable financing conditions to help counter the negative pandemic shock to the path of inflation.”

ECB reiterated its further commitment to adjust instruments as necessary so that inflation reaches its objective in a sustained way. 

In her statement to kick off the press conference, ECB president Christine Lagarde praised the start of the vaccination campaign, which has allowed for more market confidence, but warned of the “serious risks” to global economies and the euro area.

“Output is likely to have contracted in the fourth quarter of 2020 and the intensification of the pandemic poses some downside risks to the short-term economic outlook,” she stated. “Inflation remains very low in the context of weak demand and significant slack in labour and product markets. Overall, the incoming data confirm our previous baseline assessment of a pronounced near-term impact of the pandemic on the economy and a protracted weakness in inflation.