NICOSIA, Cyprus (AP) - The European Central Bank kept interest rates on hold Thursday and will at a press conference later face questions on the details of its 1.1 trillion euro ($1.2 trillion) bond-buying stimulus program.
NICOSIA, Cyprus (AP) — The European Central Bank kept interest rates on hold Thursday and will at a press conference later face questions on the details of its 1.1 trillion euro ($1.2 trillion) bond-buying stimulus program.
The central bank for the 19 euro countries held its benchmark interest rate at 0.05 percent at a meeting in Nicosia, the capital of eurozone member Cyprus. The bank has said the rate is so low it cannot cut it anymore.
At the meeting, one of two per year it holds away from its headquarters in Frankfurt, Germany, the bank is expected to have discussed details of the stimulus program it announced in January and is due to start this month.
At a post-meeting press conference, ECB President Mario Draghi will also likely be asked about Greece's financial crisis, in particular the emergency support the ECB is giving the country's banks and whether it would consider renegotiating some of the debt owed by the government.
The ECB is launching the bond-purchase program amid signs of a modest economic upturn in the eurozone. Analysts expect Draghi to announce an increase to its economic growth projection for this year.
The stimulus program involves buying government and corporate bonds using newly-printed money. That drives down already-low market interest rates, easing borrowing costs for business and consumers and thereby stimulating economic activity. Its primary goal is to increase the rate of inflation, currently minus 0.3 percent on an annual basis. Inflation that low is a sign of serious weakness and makes it harder for indebted governments to reduce their debt loads.
Bond-market interest rates have already fallen in anticipation. So has the euro, which sagged to $1.10 ahead of the decision.
A lower euro could be the most important side effect of the stimulus. A weaker currency can promote growth by making exporters' goods cheaper abroad, and can boost inflation by raising import prices.