Brussels, September 10: The European Central Bank (ECB) has retained the key bank rates that were reduced to their historic low earlier this year. The decision, said the ECB, is aimed at providing a stimulus to the European economy and expedite the path to recover from the recession. Fitch Ratings Slashes India's GDP Forecast to -10.5% from -5% for FY 2021.

A statement issued by the ECB confirmed that the main refinancing rate would remain as 0.0 percent. The marginal lending facility rate was retained at 0.25 percent, and what could irk the private lenders is the retention of - (minus) 0.5 percent rate for deposit facility.

The commercial banks would require to lend out at the earliest, as parking their deposits with the ECB would garner an overnight negative interest - or a penalty - of 0.5 percent.

The ECB Governing Council, which met in Brussels today before announcing their final quarterly decision, said a revision of the rates in December would only be possible if signs of inflation are noticed. Currently, the market is suffering from deflation as demand has shrunk to unprecedented levels amid the pandemic.

"The Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2 percent within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics," said the statement issued by the central bank.

The 19-EU nations using euro as their currency have reported an economic decline of 11.6 percent on an average. The ECB has planned to inject 1.35 trillion euros ($1.6 trillion) in form of government and corporate bonds. Despite the massive stimulus, the affected economies are not expected to recover before 2022.

(The above story first appeared on LatestLY on Sep 10, 2020 06:31 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).