ECB keeps interest rates unchanged

By Tuba Sahin

ANKARA (AA) - The European Central Bank (ECB) on Thursday decided to keep key interest rates unchanged and announced a new stimulus package to back euro area financial system against coronavirus outbreak.

The interest rate on the main refinancing operations and on the marginal lending facility and the deposit facility were hold at 0.00%, 0.25% and -0.50% respectively.

The bank announced an additional longer-term refinancing operations (LTROs), temporarily, to provide immediate liquidity to lenders.

"Although the Governing Council does not see material signs of strains in money markets or liquidity shortages in the banking system, these operations will provide an effective backstop in case of need," it said.

The liquidity auctions, also known as targeted long-term refinance operations (TLTRO III), has been decided to be applied at a special rate, 25 basis points below the average rate applied in the eurosystem’s main refinancing operations.

The operations aims to support bank lending to those affected most by the spread of the coronavirus, in particular small and medium-sized enterprises.

The bank also decided to boost its net asset purchases of €120 billion to support favorable financing conditions for the real economy in times of heightened uncertainty.