European Central Bank Holds Key Interest Rate at 0%... Accelerates End of Bond Purchases

Deposit interest rate and marginal lending rate also maintained at -0.50% and 0.25%, respectively

Christine Lagarde, President of the European Central Bank (ECB) (Photo by Yonhap News)

[Asia Economy Reporter Kum Boryeong] The European Central Bank (ECB) on the 14th (local time) kept the key interest rate at 0%.

The ECB held a monetary policy meeting in Frankfurt, Germany, on the same day and decided to maintain the key interest rate at the current 0%. The deposit rate and marginal lending rate were also kept at -0.50% and 0.25%, respectively.

In its monetary policy statement, the ECB said, "Russia's attack on Ukraine is causing tremendous suffering," and "inflation has risen significantly due to the sharp increase in energy prices and is expected to remain at a high level for the coming months."

The ECB Governing Council reaffirmed that, based on data collected so far, it is desirable to end bond purchases under the current Asset Purchase Programme (APP) in the third quarter.

Earlier, at the March monetary policy meeting, the ECB decided to bring forward the end date for bond purchases under the Asset Purchase Programme.

Their plan was to increase bond purchases, which had been conducted at a scale of 20 billion euros per month (approximately 27 trillion won), to 40 billion euros (approximately 54 trillion won) in April, 30 billion euros (approximately 40 trillion won) in May, and then reduce it back to 20 billion euros in June.

Previously, the plan was to increase bond purchases to 40 billion euros per month in the second quarter, then reduce to 30 billion euros per month in the third quarter, and return to 20 billion euros per month in the fourth quarter.