FRANKFURT, Nov 22: The European Central Bank issued no statement regarding interest rates at its regular fortnightly meeting on Thursday.

But no move on rates had been expected anyway after the ECB announced two weeks ago that it would make its interest-rate decisions just once a month — not twice — in future.

At its last meeting November 8, the ECB sliced half a point off its key interest rates, bringing its central “refi” refinancing rate down to 3.25 percent.

The change in the interest-setting timetable was an attempt to calm market speculation about pending rate changes and is a move that will bring it more in line with other central banks around the world, the ECB said at the time.

The meeting this week focussed instead on a technical issue, namely regulations in money and banking statistics.

Ever since its inception in January 1999, the ECB’s governing council has convened every second Thursday to decide the appropriate level of interest rates for the 12 countries that share the euro.

But the fortnightly cycle, a practice inherited from the mighty Bundesbank, was controversial from the start, since economic developments are frequently not as rapid to justify a re-examination of monetary policy every 14 days.

Indeed, the frequency of such meetings often only serves to fuel market speculation and nervousness about possible changes in rates.

That fact was recognised by the ECB’s president Wim Duisenberg who announced the change in policy at a news conference on November 8.

We have the impression that the fortnightly meetings nurture speculation and increase volatility, he explained at the time.

The bank’s policy-setting governing council, which comprises the central bank governors from all 12 euro-zone countries, would continue to meet twice a month.

But it will assess the stance of monetary policy only at the first meeting of the month. Accordingly, interest rate decisions will normally be taken during that meeting, Duisenberg said.

At the second meeting of the month, the governing council will deal for the most part with issues related to other tasks and responsibilities of the ECB.

And after the second meeting, no press release on the ECB’s monetary policy decisions will be issued, Duisenberg said.

Duisenberg said that, if warranted by circumstances, the governing council can still decide to change the ECB’s key rates at any time, regardless of previously scheduled meetings.

That was recently demonstrated by the decision to lower rates on September 17.

The ECB appears to be trying not to copy the US Federal Reserve, which meets eight times a year, or roughly every six weeks.

But the new practice has brought it in line with the Bank of England, which meets once a month to set interest rates.—AFP