ECB: QE Will End By The End of December, No Rate Hikes Till Mid-2019
The European Central Bank left interest rates without changes and signalized that there won’t be any rate hikes until the summer of 2019. The main refinancing rate, which determines the cost of credit in the economy, remained unchanged at 0.00%, while the rate on the marginal lending facility (the emergency overnight borrowing rate for banks) stayed at 0.25%.
The ECB said it anticipates that its asset purchase program will end in December after halving to €15 billion per month from September 2018, from €30 billion at present. The ECB has already spent well over than 2 trillion euros buying bonds since 2015 and has kept its deposit rate below zero, effectively charging banks for their idle cash, for four years in a bid to revive inflation.
The euro fell sharply after the ECB said that the QE will end by the end of December, with rates remaining unchanged until the summer of 2019. The EUR/USD pair has lost more than 120 bps and is currently trading at $1.1721.