European Central Bank keeps key interest rate on hold

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The European Central Bank (ECB) has kept its main interest rate on hold at zero for another month.

It also decided not to change the ECB’s bond-buying stimulus scheme, which is already being trimmed to 60bn euros a month from 80bn euros.

Attention now turns to a news conference ECB head Mario Draghi will give later to outline the decisions.

Last month, Mr Draghi spoke of being “more optimistic” about the eurozone’s economic health.

The ECB boss said that the 19-nation bloc was no longer being stalked by deflation.

Growth

Howard Archer, chief European economist at IHS Markit, said the bank had kept its “policy unchanged as fully expected”.

As well as the rates decision, the bank said it would continue buying 60bn euros of bonds a month “until the end of December 2017, or beyond, if necessary”.

The ECB cut its main interest rate to zero last year to try to stimulate economic growth and avoid deflation or falling prices.

Economic growth has picked up in recent months, with employment rising and economic sentiment hitting a 10-year high this month.

Inflation, though, slipped back to 1.5% in March after briefly going above the ECB’s target for the first time in four years in February.

 

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