BRUSSELS, Nov. 7, 2019 -- Christine Lagarde Front, President of the European Central Bank, waits to attend the Eurogroup meeting in Brussels, Belgium, on Nov. 7, 2019.
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The European Central Bank (ECB) on Thursday held interest rates steady as it launched its first strategic review since 2003, in a bid to establish whether its inflation target is still appropriate.
In its first rate decision of the year, the central bank's Governing Council voted unanimously to keep the main deposit rate at a historic low of -0.5%, in line with market expectations. The marginal lending facility remained at 0.25% and the main refinancing operations rate stayed at 0%.
In an accompanying statement, the ECB reiterated that rates will remain at their current level or lower until the inflation outlook is seen to "robustly converge" to a level close to but below 2%.
Net asset purchases as part of the quantitative easing program started in November at a monthly rate of 20 billion euros ($22.3 billion), and the ECB reiterated on Thursday that this will continue to run "as long as necessary" to reinforce the accommodative policy stance.
The strategic review launched Thursday was one of the first moves announced by Lagarde upon starting her tenure, with the central bank's persistent low interest rate stance under fire from market participants who say it has become detrimental to economic growth.
Further details about the scope and timetable of the review will be published in a press release at 15:30 p.m. CET.
The strategic review is expected assess why inflation has remained stubbornly below target for many years, and whether the means of calculating the target needs to change, among other considerations.
"Markets will be paying close attention to the three 'Ts' when the scope of the review is announced," Michael Brown, senior market analyst at Caxton, said in a note Wednesday.
"Firstly, target; will the ECB revise their inflation aim, perhaps targeting inflation symmetrically or defining the target more precisely? Secondly, transparency; the Governing Council are likely to discuss publishing voting records or adopting an interest rate forecast similar to the Fed's dot plot. Thirdly, timing; policymakers are likely to want to conclude the review before year-end."
In September last year, Lagarde's predecessor Mario Draghi cut the ECB's deposit rate by 10 basis points to its current level and launched a massive new QE program in a bid to stimulate the euro zone economy and push towards the central bank's inflation target.
ECB President Christine Lagarde inherited an inflation rate of 1.0% in the euro zone upon taking the reins in November.
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