Investing.com – As markets expected, the European Central Bank (ECB) made no changes to its record-low interest rates and announced no new measures on Thursday, while leaving the door open to the possibility of further increasing asset purchases.
Specifically, the ECB left its benchmark interest rate unchanged at a record-low 0.0%, in line with forecasts.
The central bank also held its deposit facility rate steady at -0.4% and its marginal lending rate remained at 0.25% as expected.
Additionally, the ECB also confirmed, as previously announced, that the size of its monthly quantitative easing program would continue at the new monthly pace of €60 billion ($65.4 billion) until the end of December 2017, “or beyond, if necessary”.
“The Governing Council continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time, and well past the horizon of the net asset purchases,” the statement repeated.
The arguably most-watched phrase of the ECB statement maintained that the euro zone monetary authority was still contemplating the possibility of increasing accommodation if necessary.
“If the outlook becomes less favorable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the Governing Council stands ready to increase the program in terms of size and/or duration,” it reiterated, confirming that the ECB remains open to further easing if economic developments so require.
After the decision, traders looked ahead to ECB president Mario Draghi’s press conference at 8:30AM ET (13:30GMT).
Market participants will pay close attention to any hints Draghi may give on future path of monetary policy with particular regard to the removal of accommodation, although most analysts believe that he will likely wait until the Jackson Hole Economic Symposium near the end of August to pre-announce intentions for the September 7 meeting.
After the announcement and ahead of Draghi, the euro weakened. EUR/USD was trading at 1.1485 from around 1.1493 ahead of the release, while EUR/GBP was at 0.8877 from 0.8880 earlier.
Meanwhile, European stock markets extended earlier gains. The benchmark Euro Stoxx 50 rose 0.69%, France's CAC 40 gained 0.44%, Germany's DAX advanced 0.67%, while London’s FTSE 100 traded up 0.70%.