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 euro nations continue to struggle to raise Covid-19 infections and subsequent blockades. Still, he reiterated that he was “ready” to adjust his tools if the economic situation does not improve.
The ECB’s main refinancing operations, marginal lending facility and deposit facility will remain at 0.00%, 0.25% and -0.50%, respectively, according to a statement.
The ECB intensified its massive stimulus program in December to support the region’s economic recovery. Its pandemic emergency procurement program extended to March 2022, with a total of 1.85 trillion euros ($ 2.25 trillion) in bond purchases. This allows eurozone governments to obtain cheaper rates by borrowing from public markets.
However, there are doubts about how the euro area will cope this year, following the fall in GDP (gross domestic product) of 7.3% 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. This week, for example, Germany extended the national closure until February 14th. The Netherlands has announced that there will be a curfew from next week. And France opted to intensify the curfew hours earlier this month, while Portugal will close schools from Friday.
There have been more than 16 million Covid-19 infections in the EU and more than 400,000 deaths to date, according to the European Center for Disease Prevention and Control.
“The Governing Council remains willing to adjust all its instruments, as appropriate, to ensure that inflation moves towards its target in a sustained manner,” the ECB said in a statement.
European leaders hope to speed up vaccinations in the coming months as a way to contain the spread of the virus and its economic impact. The European Commission, the executive arm of the EU, has called on member states to vaccinate at least 70% of their adult populations by summer.
Despite the troubled situation, the ECB has remained on its growth forecasts for this year. Speaking at an event earlier this month, central bank president Christine Lagarde said: “I think our latest projections in December are still very clearly plausible.” In December, the bank estimated a GDP rate of 3.9% for 2021 and 2.1% for 2022.