ECB Set to Keep Interest Rates Low for Longer Amid Delta Variant Spread

FRANKFURT--The European Central Bank signaled that it would support the eurozone economy by keeping interest rates low for longer as a surge in Covid-19 cases driven by the highly contagious Delta variant triggers new social restrictions and weighs on the region's large tourism industry.

The ECB's move is in part a response to its new policy framework, unveiled two weeks ago, which aims to give bank officials broader powers to stimulate the economy when inflation is too low.

The central bank said in a statement that it won't increase its key interest rate, currently set at minus 0.5%, until inflation moves much closer to its target of 2% and looks likely to remain at that level. "This may also imply a transitory period in which inflation is moderately above target," the bank said. The ECB had previously given a looser commitment to hold interest rates until inflation looked likely to hit its target within a few years.

The ECB also reiterated its pledge to buy eurozone debt under an emergency 1.85 trillion euros bond-buying program, equivalent to $2.2 trillion, through at least March 2022.

Write to Tom Fairless at

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  07-22-21 0820ET
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