ECB Leaves Rates Unchanged

Central bank refrains from action despite clamor for further stimulus.

The European Central Bank refrained from cutting interest rates as President Mario Draghi faces pressure to reduce bond yields to protect the euro.

Policy makers meeting in Frankfurt today left the benchmark rate at a record low of 0.75 percent, as predicted by 51 of 55 economists in a Bloomberg News survey. Four predicted a cut to 0.50 percent. The deposit rate was held at zero. Draghi holds a press conference at 2:30 p.m. in Frankfurt.

Seeking Consensus

In the past week, Draghi has canvassed support among ECB council members and politicians for a multi-pronged approach to reduce yields, two central bank officials with knowledge of the discussions said on July 27.

Other Options

Another option is for the ECB to purchase bank and corporate bonds to ease financing conditions, said Huw Pill, chief European economist at Goldman Sachs International in London. Pill expects the ECB to allow national central banks to buy such assets at their own risk, which would “offer scope for surgical interventions targeted to address the most impaired elements of monetary policy transmission,” he said in a note to clients on July 29.

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