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ECB Leaves QE, Forward Guidance Unchanged

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The European Central Bank left its key interest rates, asset purchases and forward guidance unchanged on Thursday, amid softening growth momentum in the euro area.

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.

"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 current monthly pace of EUR 30 billion, will 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.

In the March meeting, the ECB tweaked the forward guidance by dropping the easing bias on asset purchases, after a clear divide in the Governing Council surfaced over the past few policy sessions.

Draghi is set to hold his press conference at 8.30 am ET in Frankfurt, when reporters are expected to quiz him regarding the trade war concerns and softening growth in the region.

"Given the apparent softening of economic growth since the ECB's last meeting, it is no surprise that the Bank has chosen to keep its policy and forward guidance unchanged," Capital Economics economist Jennifer McKeown said.

"But we expect President Draghi to hint at the press conference that a gradual normalization is still to come."

Interest rates will be on hold until well past the horizon of net asset purchases, which likely implies a hike in September 2019 at the earliest, the economist added.

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