ECB keeps interest rates, guidance unchanged as expected

The logo of the European Central Bank is pictured outside its headquarters in Frankfurt

FRANKFURT (Reuters) – The European Central Bank left its interest rates and policy stance unchanged as expected on Thursday, keeping its unprecedented stimulus in place as inflation is still below its target, even if growth is finally accelerating.

Fighting negligible inflation for years, the ECB has kept its deposit rate in negative territory since 2014 and plans to buy 60 billion euros worth of bonds each month at least until December.

Meeting between the two rounds of the French presidential election, the ECB was expected to take a cautious stance, staying largely on the sidelines even after pro-euro centrist candidate Emmanuel Macron appeared to be in pole position to win next weekend.

The majority of economists polled by Reuters expect the ECB President Mario Draghi to maintain the bank’s bias for policy easing at least until June, when a small shift in tone is possible.

On Thursday, the ECB repeated its standard guidance that it expects its key interest rate to remain at present or lower levels for an extended period of time and well past the horizon of its asset purchases.

It also affirmed that its asset buys, which have been cut by a quarter to 60 billion euros this month, could be increased or extended if the outlook for the euro zone becomes less favorable.

The ECB kept its rate on bank overnight deposits, which is currently its primary interest rate tool, at -0.40 percent.

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

Markets now turn their attention to Draghi’s news conference at 1230 GMT, where he will provide the rationale for the decision to keep the policy stance unchanged.

(Reporting by Andreas Framke Editing by Jeremy Gaunt)