Wednesday, June 3, 2015

ECB maintains rates, to comment on reasons later

    The European Central Bank (ECB) left its key interest rates unchanged, including the benchmark repurchase rate at 0.05 percent, and will comment on its reason for its decision at a press conference later today.
   The ECB, which began purchasing bonds from euro zone governments in March in an attempt to stave off deflation and boost economic activity by keeping bond yields low, was widely expected to maintain its rates, including the deposit rate that was cut to minus 0.20 percent in September 2014.
    The ECB, the central bank for 19 European nations, plans to purchase 60 billion euros of public and private sector securities a month until the end of September 2016 in an attempt to boost inflation toward its target of just below 2.0 percent.
    Last month ECB officials said the bank was frontloading asset purchases ahead of the normal lull in trading during the summer months so it could meet its monthly goal for purchases.
    In May the consumer price inflation rate rose to 0.3 percent from zero in April, breaking a spell of deflation from December through March.
    Gross Domestic Product in the euro zone expanded by 0.4 percent in the first quarter of this year from the fourth quarter for annual growth of 1.0 percent, up from 0.9 percent in the fourth quarter of 2014.
    Later today the ECB is also due to update its economic forecast, issued four times a year. In March ECB staff forecast GDP growth of 1.5 percent this year, 1.9 percent in 2016 and 2.1 percent in 2017.
    Inflation was forecast a 0.0 percent this year, 1.5 percent in 2016 and 1.8 percent in 2017.


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