European Central Bank keeps its monetary policy unchanged

As markets expected, the European Central Bank left its monetary policy unchanged at its January meeting on Thursday.

Following the policy meeting, the ECB President Mario Draghi said the Euro zone's economic recovery remained subdued. Moreover, the ECB President stated at the post-meeting press conference that the region's economic growth is unlikely to gain momentum in the upcoming months due to the slow pace of structural reforms. According to Draghi, fiscal policies should also support the Euro zone's economic recovery within the European Commission's system of rules. The headline inflation rate is expected to rise more in the short-term, driven by higher energy prices. In the meantime, the Central bank said that underlying inflationary pressures in the region remained benign. However, the ECB expressed hopes for an increase in core inflation over the medium term. The EUR/USD pair hit its daily low of $1.0607, following Draghi's comments on inflation. The Central bank pointed to an upstick in manufacturing activity and rising confidence indicators. Nevertheless, it signaled it was ready to provide additional monetary stimulus if economic conditions worsen. Back in December, the Bank cut its monthly asset purchases to 60 billion euros but extended the QE program by six months until at least March 2017.