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 as euro area countries continue to grapple with rising Covid-19 infections and subsequent lockdowns.
The main refinancing operations, the marginal lending facility and the ECB deposit facility remain 0.00%, 0.25% and -0.50%, respectively, the statement said.
In December, the ECB stepped up its comprehensive stimulus program to support the economic recovery in the region. The Pandemic Emergency Purchase Program (PEPP) was extended to March 2022 for a total of 1.85 trillion euros ($ 2.25 trillion) in bond purchases. This allows eurozone governments to get cheaper rates when borrowing from public markets.
However, according to ECB forecasts, there are doubts about how the eurozone will survive this year, following a decline of 7.3% of GDP (gross domestic product) last year.
The new year started with tighter social restrictions and national lockdowns in many of the 19 countries that share the single currency. For example, Germany this week extended a national lockdown to February 14. The Netherlands has announced that there will be a curfew next week. And France chose to intensify curfew earlier this month, while Portugal closed schools from Friday.
According to the European Center for Disease Prevention and Control, there have been more than 16 million Covid-19 infections in the EU and more than 400,000 deaths so far.
However, European leaders hope to speed up vaccinations in the coming months to stem the spread of the virus and its economic impact. The European Commission, the executive arm of the EU, has asked Member States to vaccinate at least 70% of their adult population by summer.
Despite the troubled situation, the ECB has maintained its growth expectations for this year. Speaking at an event earlier this month, central bank president Christine Lagarde said, “I think our latest projections in December are still very clearly plausible.” In December, the bank estimated a GDP rate of 3.9% for 2021 and 2.1% for 2022.