President of the European Central Bank (ECB) Christine Lagarde.
FRANCISCO SECO | AFP | Getty Images
LONDON – The European Central Bank kept interest rates unchanged on Thursday, while euro nations continue to struggle with rising Covid-19 infections and subsequent blockades.
The ECB’s main refinancing operations, marginal lending facility and deposit facility will remain at 0.00%, 0.25% and -0.50%, respectively, it said in a statement.
The ECB intensified its massive stimulus program in December to support the economic recovery in the region. Its Pandemic Emergency Purchase Program (PEPP) was extended until March 2022, totaling 1.85 trillion euros ($ 2.25 trillion) in bond purchases. This allows eurozone governments to obtain cheaper rates when borrowing on public markets.
However, there are doubts about how the eurozone will cope this year, after a 7.3% drop in GDP (Gross Domestic Product) last year, according to ECB projections.
The new year began with stricter social restrictions and national blockades in many of the 19 countries that share the single currency. Germany this week, for example, extended a national blockade until February 14. The Netherlands has announced that there will be a curfew starting next week. And France opted to intensify the curfew earlier this month, while Portugal will close schools from Friday.
There have been more than 16 million Covid-19 infections in the EU and more than 400,000 deaths so far, according to the European Center for Disease Prevention and Control.
However, European leaders hope to accelerate vaccinations in the coming months, as a way to contain the spread of the virus and its economic impact. The European Commission, the EU’s executive arm, has asked member states to vaccinate at least 70% of its adult population by summer.
Despite the troubled situation, the ECB maintained its growth forecasts for this year. Speaking at an event earlier this month, central bank president Christine Lagarde said: “I think our last projections for December are still clearly plausible.” In December, the bank estimated a rate of 3.9% of GDP for 2021 and 2.1% for 2022.