The European Central Bank has held back on further stimulus measures in April, keeping the interest rate on the main refinancing operations, the interest rates on the marginal lending facility and the deposit facility unchanged at zero, 0.25 per cent and -0.4 per cent respectively.
Last month, the ECB exceeded market expectations announcing a 10 basis point cut to the deposit facility taking it to -0.4 per cent. It also cut the benchmark rate by 5 basis points to 0 per cent and announced an expanded asset purchase programme from €20bn to €80bn.
At the March meeting the ECB also announced a new series of four targeted longer-term refinancing operations, each with a maturity of four years, would be launched in June.
Salman Ahmed, chief global strategist at Lombard Odier Investment Managers, described the influence of central banks on fixed income markets as “extraordinary”.
However, Ahmed added the initial goals of March’s meeting have been met. “Markets wise, inflation expectations remain low but have stabilised while financial conditions have eased significantly, reducing risks of an imminent recession.”