Eurozone Monetary Policy


ECB confirms forward guidance, keeps rates at record low

At its 1 August meeting, the European Central Bank (ECB) kept the refinancing rate unchanged at the record low of 0.50%, a decision expected by the market. Moreover, monetary authorities reiterated the forward guidance adopted in the previous meeting, stating that the refinancing rate will remain, "at present or lower levels for an extended period of time."

The decision comes on the back of the Bank's broadly unchanged assessment of the economic outlook. According to monetary authorities, recent indicator releases point to stabilization in economic activity in the coming months, albeit at low levels. However, risks surrounding the economic outlook remain on the downside. Regarding the outlook for price developments, the ECB expects price pressures to remain subdued over the medium term and maintains the view that risks to the inflation outlook are balanced.

Against this backdrop, FocusEconomics panellists expect the policy rate to end 2013 at 0.44% and 2014 at 0.46%.

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