ECB Says Rates Will Remain Low for Months

The European Central Bank is stressing that interest rates will stay low well into next year even as the US Federal Reserve is expected to keep raising rates in coming months.

The central bank for the 19 countries that use the euro left its key rates and monetary stimulus settings unchanged at a meeting Thursday at its headquarters in Frankfurt, Germany, AP reported.

ECB President head Mario Draghi was asked at a news conference about accusations by US President Donald Trump that Europe is purposely pushing its currency down with low interest rates to gain a trade advantage.

But Draghi said the ECB monetary stimulus efforts were simply a reflection that Europe and the United States economies had emerged from the financial crisis at different periods. The eurozone economy has not had as much time to strengthen and therefore needs lower rates. “We said several times that the exchange rate is not a policy target,” he said. 

Stimulus policies such as zero interest rates can weaken a currency. But Draghi noted that euro has actually appreciated when measured against all of Europe’s trading partners. He said that while the eurozone economy is enjoying solid growth, “significant monetary policy stimulus is still needed.”

The bank had said at the previous meeting, on June 14, that it would phase out its €2.4 trillion ($2.8 trillion) bond-buying stimulus program by year-end, and would keep interest rates on hold “through the summer” of 2019. Speculation on what “through the summer” means has ranged from July to September or even later. Draghi declined to be more precise during the news conference.