The President of the European Central Bank (ECB) Christine Lagarde.
FRANCISCO SECO | AFP | Getty Images
LONDON – The European Central Bank kept interest rates unchanged on Thursday as euro nations continue to fight rising Covid-19 infections and subsequent blockages.
The ECB’s main refinancing operations, the marginal lending facility and the deposit facility will remain at 0.00%, 0.25% and -0.50%, respectively, according to a statement.
The ECB stepped up its massive stimulus program in December to support the region’s economic recovery. Its Pandemic Emergency Purchase Program (PEPP) has been extended to March 2022, totaling 1.85 trillion euros ($ 2.25 trillion) in bond purchases. This allows eurozone governments to get cheaper rates when borrowing from public markets.
However, there are doubts about how the euro area will cope this year, following a 7.3% drop in GDP (gross domestic product) last year, according to ECB forecasts.
The new year began with stricter social restrictions and national blockages in many of the 19 countries that have the same single currency. This week, Germany, for example, extended the national blockade until February 14. The Netherlands has announced that an extinction will take place next week. France also chose to intensify its coverage hours earlier this month, while Portugal will close schools on Friday.
According to the European Center for Disease Prevention and Control, there have been more than 16 million Covid-19 infections in the EU and more than 400,000 deaths.
However, European leaders hope to speed up vaccinations in the coming months as a way to control the spread of the virus and its economic impact. The European Commission, the EU’s executive arm, has called on member states to vaccinate at least 70% of the adult population by summer.
Despite the turbulent situation, the ECB has stayed with its growth forecasts for this year. Speaking at an event earlier this month, central bank president Christine Lagarde said: “I think our latest projections for December are still very clearly plausible.” In December, the bank estimated a GDP rate of 3.9% for 2021 and 2.1% for 2022.