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European Central Bank holds interest rates steady

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Christine Lagarde, President of the European Central Bank, attends a discussion during a plenary at European Parliament in Strasbourg on February 14, 2022.

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LONDON — The European Central Bank on Thursday opted to keep interest rates steady, remaining cautious as it assesses the economic fallout from Russia’s invasion of Ukraine.

The benchmark refinancing rate of the central banks remains at zero, while the marginal lending rate at the bank is at 0.25%. Meanwhile, its deposit facility rate was maintained at -0.5%.

Market participants are expected to closely monitor Christine Lagarde, President of the ECB,’s press conference at 1:30 p.m. London Time for clues about Europe’s future growth prospects. However, no major policy decisions were made by the central bank’s governing board. given the escalating crisis.

The euroThe session ended at $1.1097, an increase of 0.2%. To register Wednesday’s 1.6% rise in the common currency, it registered its highest level since January 2010. steepest daily jump in almost six years.

Two weeks ago, Russian President Vladimir Putin invaded Ukraine in a large-scale military operation. The ECB meeting took place in Frankfurt. This conflict has shaken the world economy, sending shockwaves through financial markets. Western allies have imposed a barrage sanctions on Russia.

The Kremlin’s aggression on Ukraine has seen commodity and energy prices rise, raising concerns that the euro area economy may be subject to a shock. The toxic combination of low economic growth, high inflation and slowing economic growth is known as the “toxic cocktail”.

The ECB is a complex institution. “The ECB has much to consider,” Neil Birrell of Premier Miton Investors, chief investment officer said in a memo.

The conflict in Ukraine will fuel inflation and drive food and energy prices up. He said that it cannot be allowed to get out of hand, but the ECB should be concerned about making growth stagnant.

The euro currency has seen record-breaking consumer prices rise in 19 of its member countries. This is the most recent four month. hitting 5.8% in February. The ECB has a medium-term goal of 2% inflation.

The conflict in Ukraine is also being feared to cause more disruptions to supply chains already affected by the coronavirus pandemic. This could negatively impact economic growth and increase oil prices.

An Reuters poll from March, early foundMost economists believe that the ECB will wait to increase interest rates until the last few months of the calendar year. There is no agreement on when the central bank will end its asset-purchase program.

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