European Central Bank leaves interest rates on hold

The ECB’s decision for keeping interest rates on hold for another month was widely expected by markets since the bank introduced new measures in June to stimulate the struggling EU economy and is eager to see the effects of these steps first. ECB president, Mario Draghi, is expected to hold a press conference to share his comments about economic outlook for the EU and the considerations underlying these decisions. Economists were concerned with the possibility of deflation in the eurozone as consumers, expecting prices to fall in the near future, would spend less thus completely putting a halt to the already-stuttering economy. In response to these worries the ECB on June 4 lowered its benchmark interest rate to 0.15 percent from 0.25 percent and reduced its deposit rate below zero, to -0.1 percent, in an effort to boost economic activity in the eurozone and kept the rate unchanged at its monetary policy meeting in July. Despite these measures, the annual rate of inflation in the eurozone fell further below the ECB’s target in July, to its lowest level since October 2009.