ECB Keeps Stimulus Unchanged Amid 2nd Virus Wave

The European Central Bank (ECB) kept its stimulus policy unchanged on Thursday, yet, hinted at more support in December for the eurozone economy, which is struggling with a new wave of the coronavirus pandemic.

ECB kept the deposit interest rate unchanged at a record low minus 0.5% while the prime refinancing rate remained at zero.

"The Governing Council will readjust its tools, as appropriate, to respond to the evolving situation and to ensure that financing conditions remain favorable to support the economic recovery and counter the negative impact of the pandemic on the expected path of inflation, leaving the criteria for the Pandemic Emergency Purchase Programme (PEPP) unchanged" the ECB said.

The European Central Bank is buying record amounts of debt, leaving policymakers time to pressure governments to use budget leverages to help the economy after already extended its copious stimulus to next June.

Meantime, new restrictions aimed at curbing the spread of COVID-19 are weighing on the economy of the euro zone, raising fears that it may slide back into recession as the services sector is shutting down again, leaving the Bank with few options but to extend and expand the PEPP of €1.35 trillion.

ECB pointed out that the current downward trend will push the Governing Council to carefully evaluate the dynamics of the pandemic, including  the prospects for launching vaccines and developments in the exchange rate.

With Thursday's decision, ECB also remains on track to buy hundreds of billions of euros worth of bonds through other asset purchase schemes.