Investing.com - The European Central Bank disappointed markets hoping for fresh stimulus measures to bolster price growth in the euro area on Thursday after it cut the deposit rate and extended the duration, but not the pace, of its bond-buying purchase program.
The ECB’s governing council lowered the deposit facility rate to -0.3% from -0.20%, disappointing some analysts’ expectations for a deeper cut to -0.4%.
The main refinancing rate was left unchanged at a record-low 0.05%, in line with market expectations. The central bank also held its marginal lending rate, the rate charged to banks when they borrow from the ECB, at 0.30%.
ECB President Mario Draghi said the bank would also expand its bond-buying purchase scheme beyond the current cut-off point of September 2016 until the end of March 2017, or beyond if necessary.
The ECB extended the range of assets that are eligible for purchase and will now also buy regional and local government debt and will reinvest the proceeds from quantitative easing as bonds mature.
The pace of the QE program is to remain unchanged at €60 billion, disappointing expectations that the central bank would accelerate the monthly pace of its bond-purchasing program.
Draghi reiterated that the ECB still had a range of options at its disposal.
“We have a menu of options. Fortunately our monetary policy has many tools. Our asset purchase program is flexible – can always adjust, horizon, size and design,” he said.
The monetary policy decision was not unanimous Draghi said, but there was a very large majority in favor.
The bank slightly raised its growth forecasts, saying it now sees growth of 1.5% in 2015, up from 1.4% previously. The growth forecast for 2016 remained unchanged at 1.7% and growth is expected to pick up to 1.9% in 2017 from 1.8% previously.
However, Draghi said the latest projections indicate continued downside risks to the inflation outlook.
The ECB expects consumer prices to rise by 0.1% this year, 1% next year, and 1.6% in 2017, having previously projected increases of 0.1%, 1.1% and 1.7%.