Vienna, 11/10/2001 (Agence Europe) - As it had not discovered any risk for price stability, the European Central Bank (ECB) decided, on Vienna on Thursday, to keep its key rates unchanged. The decision was taken during the meeting of its Governing Council. The minimum bid rate applied to main refinancing operations remains 3.75%, and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 4.75% and 2.75% respectively. The ECB considered that the current level of interest rates is coherent with medium term price stability policy. Wim Duisenberg explained at a press conference that a "series of regular cuts in rates would undermine public confidence".
Mr Duisenberg warned that the ECB currently only had a "very small" margin of manoeuvre for lowering interest rates as the economic situation is evolving rapidly. He noted that the terrorist attacks last month "had a negative impact on economic activity and on confidence that could delay recovery of greater economic growth". He even tabled on "modest" European growth early 2002. He did in fact recognise that it was "acceptable" for certain euro-zone countries to have budgetary deficits that are slightly higher in the short term. He went on to recall that it was of prime importance to keep to a strict budgetary policy in the longer term. Among the positive economic elements, Mr Duisenberg stressed the fall in the price of oil which should help to contain inflationary pressure and support the income of households, the maintaining of policies in the euro zone aimed at price stability, budgetary adjustment, wage moderation and structural reforms, and a fall in the inflation rate. The ECB also noted the following monetary developments: - a strong rise (that should however be considered as "temporary" and not a source of inflationary tension) of the M3 monetary mass due to the uncertainties weighing on the stock market; - and the slowdown in the growth of financing allocated to the private sector.