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ECB Keeps Rates Unchanged, Drops Easing Bias On Asset Buys

The European Central Bank left its key interest rates and asset purchases unchanged on Thursday, but omitted the mention of its stance that it will boost the asset purchases if outlook turned less favorable.

The Governing Council, led by ECB President Mario Draghi, left the key interest rates unchanged after the policy session in Frankfurt, in line with economists' expectations.

The main refi rate is currently at a record low zero percent and the deposit rate at -0.40 percent. The marginal lending facility rate is 0.25 percent.

There was also a change in the forward guidance with bank dropping its easing bias on asset purchases, as some economists' expected.

"The Governing Council expects the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases," the ECB reiterated.

The bank also confirmed that the net asset purchases, at the new monthly pace of EUR 30 billion, are intended to run until the end of September 2018, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim.

However, there was no mention of its earlier stance that the Governing Council stands ready to increase the asset purchase programme in terms of size and/or duration if the macroeconomic outlook turned less favorable.

In previous sessions, some policymakers had sought such a change to the forward guidance saying that the economic recovery was gaining momentum.

"The Eurosystem will reinvest the principal payments from maturing securities purchased under the asset purchase programme for an extended period of time after the end of its net asset purchases, and in any case for as long as necessary," the bank said. "This will contribute both to favorable liquidity conditions and to an appropriate monetary policy stance."

Draghi is set to hold his press conference at 8.30 am ET in Frankfurt when he is expected to explain the change to the forward guidance. He is also expected to face questions regarding the Latvian banking system scandal and the Italian election results.

The ECB Chief will also unveil the latest ECB Staff macroeconomic projections.

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