The European Central Bank held its key interest rates at record lows Thursday amid media reports of dissent over President Mario Draghi’s leadership and communication style.
The euro zone’s benchmark lending rate will remain at 0.05 percent, while its deposit rate will stay at negative 0.20 percent—effectively charging lenders for holding deposits with the central bank.
At his regular press conference, Draghi said heightened unemployment would dampen the euro area’s economic recovery and that the unstable geopolitical situation would also weigh—particularly on investment.
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Draghi added that data showed growth momentum in the euro zone had weakened since the summer, leading to a downward revision of GDP estimates until 2016.
Citing ECB sources, Reuters reported on Tuesday that euro area central bankers were planning to challenge Draghi over what they see as his secretive management style and erratic communication. The agency said central bankers hoped to persuade Draghi to act more collegially at the ECB policy meetings that took place on Wednesday and this morning.
Conflict within the 24-member ECB Governing Council could limit Draghi’s scope for bolder policy action in the coming months. Analysts continue to debate whether the ECB will instigate a U.S.-style sovereign bond-buying program.
The Bank has already announced unconventional stimulus measures, including asset-backed security (ABS) purchases, in an attempt to boost growth and inflation in the euro area.
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Inflation remains well-below the ECB’s targeted level of close to 2.0 percent, coming in at 0.4 percent in October. The region’s economy failed to grow in the second quarter of this year, and both Italy’s and Germany’s economies shrunk.
At his press conference on Thursday, Draghi said that the ECB’s newly announced purchasing programs would last for at least two years.
Also on Thursday, the Bank of England opted to leave its benchmark interest rate unchanged at 0.5 percent and hold the size of its bond portfolio at £375 billion ($ 597 billion).
Attention will now shift to the Bank of England’s inflation report, which will be published next Wednesday. Investors hope this will shed light on when the Bank might start hiking rates.