European Central Bank keeps monetary stimulus on track

FRANKFURT, Germany (AP) — The European Central Bank has left its monetary stimulus programs unchanged ahead of a key meeting of EU leaders on a recovery plan meant to help the economy bounce back from the coronavirus shutdowns.

The ECB held off providing new measures Thursday after unleashing massive doses of monetary stimulus in recent weeks that have helped keep borrowing costs for companies and consumers at roughly pre-virus levels.

At its last meeting June 4, the bank’s 25-member governing council increased its pandemic emergency bond purchase program by 600 billion euros to 1.35 trillion euros ($1.7 trillion), a step which pumps newly created money into the economy with the aim of keeping credit cheap and abundant for those who need it.

One big goal for central banks such as the ECB and the U.S. Federal Reserve is to prevent the public health crisis from creating panic on financial markets that would constrict financing for companies at a time when many are struggling to stay in business due to restrictions on activity or reluctance by consumers to risk infection through face to face interaction.

The next big policy news in Europe will come on Friday, when leaders of the 27 EU countries discuss a proposed recovery fund backed by common borrowing. The ECB has urged governments to help support the economy through their spending policies.

Rancorous disagreement among leaders over how to deliver the aid could unsettled markets and leading to higher borrowing costs for indebted countries such as Italy. But if leaders narrow their differences that could contribute to further market calm. A complete deal is expected later this year.

At the ECB, investors will be looking at comments by President Christine Lagarde at her post-meeting news conference about her view on...