ECB Says Low Rates to Stay Until the Job Is Done

Facing unease over the spread of a more contagious variant of the coronavirus, the European Central Bank said it would maintain its stimulus in the form of ultra-low interest rates until inflation “durably” reaches its 2% target, the Associated Press reported. The monetary authority for the 19 countries that use the euro said it would not back off its efforts to support the economy, even if that resulted in a “transitory” period of inflation moderately above target. ECB President Christine Lagarde underlined the bank’s determination to persist with supportive policy. She said that the recovery “is on track” but warned that the more contagious delta variant of the coronavirus “continues to cast a shadow.” The bank’s policy meeting Thursday was the first to employ the bank’s new monetary policy strategy that analysts say will permit the bank to employ stimulus for longer periods. The strategy abandoned the bank’s old inflation target of “close to but below” 2% in favor of a “symmetric” 2% target that allows for extended stimulus in times of trouble — even if that means briefly overshooting the inflation target. The bank otherwise left its key rates and stimulus programs unchanged. Read more.