ECB hold rates but tipped to signal further stimulus in pipeline


European Central Bank chief Mario Draghi is expected to open the door to further stimulus measures Thursday to head off risks to the eurozone posed by deflation and slowing emerging economies after the bank left interest rates unchanged.

Last month’s 0.1-per-cent fall in annual eurozone inflation and cooling growth in economies such as China, Brazil and Russia have increased the pressure on the central bank to extend its 1.1-trillion-euro (1.3-trillion-dollar) bond-buying programme.

The September drop in consumer prices on the back of recent plunges in oil prices pushed inflation in the 19-member eurozone further away from the central bank’s annual inflation target of just below 2 per cent.

However, the central bank decided to keep its benchmark rate, which banks have to pay when borrowing money from the ECB, on hold at a historic low of 0.05 per cent when it met on the island state of Malta.

The Malta meeting of the Frankfurt-based bank’s 25-member governing council is one of the its regular out-of-town meetings. Malta joined the currency bloc in 2008.

After overseeing the March launch of the 60-billion-euro-a-month bond-purchasing scheme, Draghi is expected to defend the plan at a press conference set for later Thursday.

He is also expected to signal the bank’s readiness to launch new measures to boost inflationary pressures and ensure that the eurozone remains on a growth track.

Still, analysts said they believe that the bank will delay launching any further stimulus action until its December meeting when the bank unveils its latest economic growth and inflation projections.