The base rate had been set at 0.90% since May 25, 2016. The bank’s Monetary Council decided to leave the O/N deposit rate at -0.05% and the O/N and one-week collateralised loan rates at 1.85%.
In a statement released after the meeting, the Council referred to the rate cut as a “fine-tuning measure” that “supports the maintenance of price stability and the recovery of economic growth”. It noted that the outlook for inflation has “shifted downwards persistently” due to strong disinflationary effects, while the country’s economic performance in 2020 is “likely to be more subdued than earlier expected”. The Council suggested its tool chest would not be expanded. “In the Council’s view, the current set of instruments provides appropriate room for manoeuvre to respond to emerging challenges in a targeted and flexible manner,” it said. The Council said it “continues to consider” a government securities purchase programme launched among measures responding to the coronavirus crisis “as a safety net, which it intends to use in case necessary and to the extent necessary”.