The European Central Bank (ECB) left its benchmark interest rate unchanged on Wednesday and said it would continue with its generous asset-buying program, which marked the two-year anniversary of the introduction of quantitative easing (QE) in the euro zone.
The ECB stuck to the same rate of asset purchases announced in January with the monthly rate due to come down from 80 billion euros ($84.4 billion) to 60 billion euros in April and is set to run through until the end of December this year.
The remarks of ECB President Mario Draghi are likely to be scrutinized more than usual on Thursday as economists polled by Reuters expect a gradual reduction of its quantitative easing (QE) program in the second half of 2017.
The pressure has intensified on the ECB chief to listen to euro zone hawks calling for him to explain when the bank’s massive asset-buying program is likely to come to an end. Headline euro zone inflation has essentially hit the ECB’s target level of close to 2 percent and the overall economy is relatively stable.
However, Europe’s heavy political calendar could still pose significant risks and price growth is perhaps deceptive once support from food and energy weakens.
The ECB announced in January that it was keeping its main rates and bond-buying program unchanged despite an uptick in inflation seen across the euro zone. At the same meeting, Draghi also attempted to reassure lawmakers in Germany, and elsewhere in the euro zone, to try to stay patient with the central bank. He reaffirmed his belief in January that lower interest rates were needed in order to allow for higher rates in the future.
