The European Central Bank (ECB) took another step towards exiting its massive monetary stimulus programme, as it dropped the easing bias on asset purchases from its forward guidance, while leaving the key interest rates unchanged. In previous meetings, some policymakers had sought to drop the bias.

The policy-setting Governing Council, led by ECB president Mario Draghi, left the key interest rates unchanged after the policy meeting in Frankfurt last Thursday. This decision was in line with economists’ expectations.

The main refinancing rate is currently at a record low of zero per cent and the deposit rate at -0.40 per cent. The marginal lending facility rate is 0.25 per cent.

Meanwhile, reacting to US President Donald Trump’s announcement to impose tariffs on steel and aluminium, the European Union said last week that it intends to target €2.8 billion of US goods, ranging from jeans and bourbon to motorcycles and boats, should Mr Trump go ahead with his plan.

The EU said it is also weighing filing a World Trade Organisation complaint and introducing “safeguard” measures to prevent steel shipments from being diverted and flooding the European market.

In the meantime, International Monetary Fund managing director Christine Lagarde said that no one emerges victorious from a trade war.

Finally, the UK service sector activity grew at the fastest rate in four months in February, on a strong pick-up in new work, data from IHS Markit showed.

The IHS Markit/Chartered Institute of Procurement & Supply Purchasing Managers’ index rose to 54.5 in February from 53.0 in January. Any reading above 50 indicates expansion in the sector. Economists forecasted the score to rise to 53.3.

This growth in the services sector in February suggests that the UK economy has broadly maintained its pace, Paul Hollingsworth, an economist at Capital Economics, said.

This should keep the door open for the Bank of England to hike interest rates again in May, the economist noted.

This report was compiled by Bank of Valletta for general information purposes only.