"Economic recovery in the euro area continues to be dampened by subdued growth prospects and a sluggish pace of implementation of structural reforms Additional stimulus is expected from the monetary policy measures still to be implemented and will contribute to further rebalancing the risk to the outlook for growth".
- Mario Draghi, ECB President
The European Central Bank revealed no surprises regarding interest rate decision as all three main interest rates left on hold, in line with majority of economists' expectations. The central bank's main interest rate, remains at a record low of 0%, while the deposit rate, in turn, will stay at minus 0.4%, indicating that commercial banks continue to pay to park funds with the central bank overnight. The market posted minimal reaction to the following news and was mostly concentrated on President Draghi's press conference. During the ECB President press conference it was revealed that there is willingness to take further action if inflation doesn't pick up decisively, however the need for patience is necessary as previously announced stimulus measures take effect. Also, it was stressed out that Central bank would start its corporate bond purchase programme on June 8 and would conduct its first operation in its new series of targeted loans on June 22.
Meanwhile, despite a recent increase in oil prices, the ECB's economists revealed positive inflation forecast for this year, as well as left their projections for next year and 2018 unchanged, an indication that further stimulus measures may be needed if policy makers are to meet their inflation target of just under 2%.
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