(Bloomberg) --
European Central Bank policy makers didn't even propose cutting interest rates at their meeting on Thursday despite widespread market expectation that they would so, according to people familiar with the matter.
The Governing Council's session to agree on how to confront the threat posed by the coronavirus was held in a somber atmosphere in which officials accepted that there is little monetary policy alone can do, the people said, asking not to be identified because the discussions were confidential.
They agreed that President Christine Lagarde would use her press conference to stress that lowering the central bank's rates was not the appropriate response. An ECB spokesman declined to comment.
Investors had priced in at least a 10 basis-point rate cut. The focus instead on a nuanced package that included time-limited asset purchases and a liquidity program to shift credit toward struggling companies also proved disappointing. Lagarde said agreement on the package was unanimous. European stocks tumbled the most on record and Italian bonds plunged, sending send yields up the most ever.
When Lagarde appeared before reporters after the meeting, she twice said in her introductory statement that an “ambitious and coordinated fiscal policy response” to the virus is needed. European Union finance ministers are due to meet on Monday and the president later told CNBC in an interview that she hopes they'll take the right measures.
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To contact the reporter on this story: Paul Gordon in Frankfurt at pgordon6@bloomberg.net
To contact the editors responsible for this story: Alaa Shahine at asalha@bloomberg.net, Craig Stirling
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