“The European Central Bank kept interest rates unchanged at a record low as improving confidence underscored President Mario Draghi’s timetable for an economic recovery later this year.
Policy makers meeting in Frankfurt today left the main refinancing rate at 0.5 percent after reducing it by a quarter point last month, as predicted by 57 of 59 forecasts in a Bloomberg News survey of economists. Morgan Stanley & Co. and IHS Global Insight were the only institutions to predict a cut. Draghi will hold a press conference at 2:30 p.m.
A month after Draghi left investors to ponder a menu of further measures that the ECB might consider to aid economic growth, he may point to improving sentiment as justification for keeping borrowing costs unchanged. Still, economist say officials probably need to cut their outlook for growth after data showed the euro region’s recession extended through the first quarter and Germany’s economy barely grew.
“Draghi’s rhetoric is poised to remain dovish, confirming that the ECB stands ready to act further if needed,” said Marco Valli, chief euro-area economist at UniCredit Global Research in Milan. Still, “we do not expect any bold announcement on unconventional policy,” he said.
The ECB held its deposit rate at zero and its marginal lending rate at 1 percent. The Bank of England kept its bond-purchase target at 375 billion pounds ($580 billion) and maintained its key rate at 0.5 percent.
