Though the euro dipped in the immediate wake of the announcement, Graf said that the shared currency would likely hold its strength. Negative rates are meant to encourage banks to lend money to businesses rather than holding it themselves or, as is the case with the deposit facility rate, depositing it with the ECB overnight. Asset purchases (QE) will remain at $60 billion per month until December and beyond if necessary. The size was reduced in March from Euro 80 billion.
While the European Central Bank removed a reference to the possibility of further rate cuts, it reiterated its standard guidance that it expects the key interest rate to remain at its present level well past the horizon of its asset purchases.
"Currency markets are watching the United Kingdom election, the ECB meeting tomorrow and then casting eyes forward to the Federal Reserve meeting next week", said Bill Northey, chief investment officer at the private client group of U.S. Bank in Helena, Montana. This came in at 1.4% in May, following on from 1.9% in April and 1.5% in March.
However, the Governing Council retained the option to top up its quantitative easing programme should the outlook turn "less favourable" or tighter financial conditions threaten the ECB's price stability objective.
A report by Bloomberg on Wednesday, citing a draft forecast, said the central bank will lower its inflation projections through 2019.
Measures of underlying inflation continue to remain subdued.
Draghi revealed in the question and answer period that while there was no vote on the decisions, he "did not hear any dissenting voices".
"We need to be patient and we need to be confident", Draghi said.
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Meanwhile, the by-products of this ultra-loose monetary policy have become clear. That's essentially a effect of a slide in oil prices, but core inflation has repeatedly failed to hold above one per cent.
Draghi conceded that recent data suggest "a stronger momentum in the euro area economy, which is projected to expand at a somewhat faster pace than previously expected".
While Draghi emphasized that the deteriorating inflation outlook was due to movements in price for food and oil, "it is hard for markets to contemplate tighter monetary policy next year with this forecast", said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, in a note.
As was widely expected, no rates were moved and ECB President Mario Draghi took a rather dovish stance, showing little motivation to discuss the prospect of stimulus exit. The common currency was fetching $1.1251, having regained some footing after slipping to as low as $1.1204 on Wednesday, pressured by reports suggesting the European Central Bank would lower its inflation targets.
The bank raised the euro area growth forecast for this year to 1.9 percent from 1.8 percent.
USA 30-year bonds fell 9/32 in price, yielding 2.851 percent, compared with Wednesday's 2.837 percent.
Updated forecasts to be announced by Draghi will show a stronger growth outlook but a weaker inflation picture across the projection horizon, according to eurozone officials familiar with the matter. Eurozone monetary policy however looks like it is likely to change only very slowly, with "subdued" core inflation pressures continuing to be a concern for the European Central Bank.
The central bank will continue to buy €60bn of bonds, including government debt, each month until at least the end of the year.
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