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ECB launches review, keeps policy on hold

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The European Central Bank left its policy unchanged on Thursday and launched a "strategic review" of its inflation goal and tools.

[FRANKFURT] The European Central Bank left its policy unchanged on Thursday and launched a "strategic review" of its inflation goal and tools.

"The Governing Council...decided to launch a review of the ECB's monetary policy strategy," the ECB said.

It reaffirmed its pledge to keep rates at rock bottom or even cut them, while also buying bonds at 20 billion euros(S$29.9 billion) per month, until inflation in the euro zone headed back to its target of just under 2 per cent.

"The Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2 per cent within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics," the ECB said.

The statement was effectively unchanged from December, suggesting a stabilisation in euro zone economic data had been deemed insufficient to tighten the ECB's ultra-easy message.

This will last months and span topics from the inflation target to digital money and the fight against climate change.

With Thursday's decision, the ECB's rate on bank overnight deposits, which is currently its primary interest rate tool, remains at a record low of -0.50 per cent.

The main refinancing rate, which determines the cost of credit in the economy, remained unchanged at 0.00 per cent while the rate on the marginal lending facility - the emergency overnight borrowing rate for banks - stayed at 0.25 per cent. 

REUTERS