The European Central Bank left its ultra easy monetary policy stance unchanged as expected on Thursday, keeping rates at record lows and even leaving the door open to more asset buys if the outlook worsens. David Pollard reports.
After a June shock, there was little surprise for July. Hawkish remarks that sent bond yields and the euro soaring just over three weeks ago now superseded - as expected - by a more doveish ECB governor. SOUNDBITE (English) MARIO DRAGHI, ECB PRESIDENT, SAYING: "A very substantial degree of monetary accommodation is still needed." Draghi underlining the same thought later during his news conference. SOUNDBITE (English) MARIO DRAGHI, ECB PRESIDENT, SAYING: "We need to be persistent and patient, because we aren't there yet." His remarks sent the euro to a two-day low before it recovered again. Analysts quick to point out what the worry was. (SOUNDBITE) (English) PANMURE GORDON CHIEF ECONOMIST, SIMON FRENCH, SAYING: "One word for the ECB, that's inflation. The inflation print in Europe at the moment, in the eurozone, is one point three percent. Of course Mario Draghi has set this 2 percent target. He's not hitting it, despite the fact that the PMIs, a lot of the cyclical indicators, are really picking up quite strongly. There's a decent growth performance." The euro zone now in its 17th straight quarter of growth - its best run since the financial crisis. That in itself an issue as a stronger euro keeps the lid on import price pressures. But: the ECB's asset purchases are set to go until the end of the year. A decision on whether to wind down nearly two trillion euros of stimulus seen as unavoidable. Draghi indicating 'discussions' on that might come in the autumn. (SOUNDBITE) (English) JEREMY STRETCH, HEAD OF G10 FX STRATEGY, CIBC, SAYING: "As we go into the autumn and that September meeting, markets will be very much looking for the hawks to gain control and push forward towards reduction in the bond buying program into 2018 and a gradual reversal of easing monetary policy." For the moment, though, rates on hold. Monthly bond purchases maintained at 60 billion euros.