European Central Bank: Key interest rate still at zero

Veröffentlicht am: 15-Mär-2019
Kategorie: Trading
Zuletzt aktualisiert: 15-Mär-2019

European Central Bank: Key interest rate still at zero

The key interest rate of the European Central Bank remains at zero percent, as was decided at the meeting of the Governing Council of the ECB on 7 March 2019.

The eurozone's most important interest rate has been zero for three years and, according to Mario Draghi, President of the ECB, will not be raised in 2019 and will presumably not exceed zero by 2020. The economy is cooling down due to international trade conflicts, the uncertainties of the Brexit and negative economic growth in China. This monetary policy threatens savers if the inflation rate, like the low interest rate, does not hold up for a long time and consumer prices do not rise again. So savers will have to be patient.

The Governing Council of the ECB has also decided to offer commercial banks a series of new long-term loans (TLTRO), each with a term of two years and very favourable conditions, from September 2019 to March 2021. The banks will thus receive money from the central bank at no cost in order to boost the economy.

However, the ECB does not want to invest billions of euros in government and corporate bonds again. The money from past bonds, however, will be reinvested for the time being. For more than three years, since 2015, the ECB has acquired securities worth around 2.6 trillion euros.

Due to the zero interest rate policy, monetary devaluation continues as before, which is not reflected in consumer prices, but in assets. Investors invest in real estate and other tangible assets to protect their money from devaluation. The upturn in real estate prices has also been spreading to real estate stocks for years. If interest rates in the Eurozone do not rise again sustainably, this upswing in the real estate business will continue. However, if there is a turnaround in interest rates in the future, there is a threat of a nasty awakening.



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