President of the European Central Bank (ECB) Christine Lagarde.
FRANCISCO SECO AFP | Getty Images
LONDON – The European Central Bank kept interest rates unchanged on Thursday as eurozone countries continue to fight rising Covid-19 infections and subsequent blockades. However, he reiterated that he was “ready”
The ECB’s main refinancing operations, marginal lending facility and deposit facility will remain 0.00%, 0.25% and -0.50% respectively, the statement said.
The ECB stepped up its large-scale stimulus program in December to support the region’s economic recovery. Its pandemic emergency purchases program has been extended until March 2022, with total bond purchases of 1.85 trillion euros ($ 2.25 trillion). This allows euro area governments to receive lower interest rates when borrowing from public markets.
However, there are doubts about how the eurozone will cope this year, after 7.3% of GDP (gross domestic product) last year, according to ECB forecasts.
The new year began with stricter social restrictions and national blockades in many of the 19 countries that share the single currency. Germany this week, for example, extended the national blockade until February 14. The Netherlands has announced that there will be a curfew from next week. And France has chosen to step up its classes earlier this month, while Portugal will close schools on Friday.
So far, there are more than 16 million Covid-19 infections in the EU and more than 400,000 deaths so far, according to the European Center for Disease Prevention and Control.
“The Governing Council remains ready to adjust all its instruments, as appropriate, to ensure that inflation moves towards its target in a sustainable manner,” the ECB said in a statement.
European leaders hope to speed up vaccinations in the coming months as a way to limit the spread of the virus and its economic impact. The European Commission, the EU’s executive body, has asked Member States to vaccinate at least 70% of their adult population by the summer.
Despite the problematic situation, the ECB remained with its growth forecasts for this year. Speaking at an event earlier this month, central bank president Christine Lagarde said: “I think our latest forecasts for December are still very obvious.” In December, the bank estimates 3.9% of GDP for 2021 and 2.1% for 2022.