Low rates continue, helicopter money grows.
The European Central Bank (ECB) announced Thursday that it will keep its interest rates the same. ECB President Mario Draghi confirmed that its keeping its main refinancing rate unchanged at 0.0 percent; the marginal lending rate unchanged at 0.25 percent and the deposit facility rate unchanged at -0.4 percent.
Moreover, the ECB will begin to expand its monthly quantitative easing (QE) program to 80 billion euros ($91 billion). This will commence in June. Draghi told reporters that the latest expansion will work this time. Ostensibly, European markets were less than confident as the London FTSE 100 slipped 0.6 percent, France’s CAC 40 dipped 0.5 percent and Germany’s DAX fell 0.2 percent.
Despite interest rates remaining unchanged, Draghi said the ECB would be open to further rate cuts down the line if inflation continues to be low.
On the topic of the Brexit, Draghi noted that the United Kingdom-EU relationship is “mutually beneficial.”
Reporters also asked Draghi about Germany’s criticism over the central bank’s monetary policy measures. He responded that everything is legal.
“We obey the law, not the politicians, because we are independent,” he said. “Our policies work, they are effective. Just give them time to fully display their effects.”
In the end, Draghi pretty much pleaded with everyone to believe him that ECB’s QE will work but that it just needs more time.
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