ECB Keeps Policy, Guidance Unchanged

The European Central Bank reaffirmed its ultra-easy policy stance on Thursday, promising to keep rates steady until after the end of bond buys and maintaining a pledge to extend the purchases, if necessary.

The ECB kept rates at record lows and confirmed that quantitative easing bond purchases would continue at 30 billion euros ($36.5 billion) a month until at least end-September or until it saw a sustained adjustment in the path of inflation.

With the euro zone economy expanding for 20 straight quarters, policymakers are now debating how and when to curb stimulus further, hoping that a rapid, jobs-rich expansion will eventually lift inflation back to its near 2 percent target.

But recent weaker-than-expected economic data and anemic inflation readings this year suggest the bank will take an incremental approach to removing stimulus, raising the risk it will err on the side of caution and withdraw support too slowly.

“The Governing Council expects the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases,” the ECB added, repeating its long-standing guidance on rates.

Attention now turns to ECB President Mario Draghi’s 1230 GMT news conference, at which he is likely to discuss the economic soft patch, worries over trade protectionism and the potential impact of higher oil prices.

With Thursday’s decision, the ECB’s rate on bank overnight deposits, which is currently its primary interest rate tool, remains at -0.40 percent.

The main refinancing rate, which determines the cost of credit in the economy, remained unchanged at 0.00 percent while the rate on the marginal lending facility — the emergency overnight borrowing rate for banks — remains at 0.25 percent.