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ECB leaves key interest rates unchanged
[FRANKFURT] European Central Bank governors left key interest rates unchanged Wednesday hours ahead of a critical Brexit summit coinciding with a soft patch in eurozone economic growth.
The Frankfurt institution left the rate on its main refinancing operations at zero, on its marginal lending facility at 0.25 per cent and on its deposit facility at -0.4 per cent.
Monetary policymakers gathered in Frankfurt ahead of an evening meeting of EU leaders in Brussels, set to decide whether to grant the UK a second delay to avoid Friday's no-deal deadline.
Prime Minister Theresa May must present a credible plan for passing a deal through London's fractious parliament to secure an extension from the EU, Brussels' chief negotiator Michel Barnier said Tuesday.
In Frankfurt, the central bank fears a no-deal Brexit could spark tumult on financial markets and further undermine anaemic growth in the 19-nation eurozone.
A familiar string of other threats are also weighing on confidence and activity in the bloc, including US-China trade talks and Washington's threat of harsh tariffs on European goods.
April's ECB meeting was brought forward by a day to avoid clashing with an International Monetary Fund gathering.
The Washington-based IMF on Tuesday downgraded its growth outlook for the eurozone, cutting its 2019 forecast to 1.3 per cent - slightly higher than the ECB's 1.1 per cent estimate.
Germany and Italy account for much of the expected slowdown, with export-oriented Germany labouring under the effects of a slump in global trade and Italy expected to stagnate owing to high debt levels and muted domestic demand.
"Monetary policy should continue to remain accommodative" in the eurozone, and aim to lift inflation off present levels that are "well below target", the IMF urged in its quarterly forecast.
Eurozone central bankers also slashed their price growth predictions last month, seeing inflation rising from just 1.2 per cent this year to 1.6 per cent in 2021 - still short of the ECB target of just below 2.0 per cent.
However, "signs of a rebound are growing," Pictet Wealth Management economist Frederik Ducrozet said, while the IMF also sees business activity picking up pace in 2020.
"The ECB has no reason to rush (with more supportive measures) but every reason to play for a little more time."