Cheap money to remain ECB stimulus policy

As expected, the ECB left its interest rate policy unchanged at the December meeting of the Governing Council last Thursday. The main refi rate remains at 0.25%, while the deposit rate was left unchanged at 0%.

Having surprised markets with a 25bps cut in the refi rate at its November meeting, the expectation was that there would be no fresh moves this month.

However, the ECB left the door open for further policy easing if required. ECB president Mario Draghi once again reaffirmed its forward guidance on interest rates. He said the ECB expects its key interest rates to “remain at present or lower levels for an extended period of time”.