European Central Bank keeps rates on hold as Mario Draghi says easing is on track

FRANKFURT: The European Central Bank kept interest rates unchanged at record lows as it focuses on a bondbuying programme to bolster the improving euro-area economy. The 25-member Governing Council left the main refinancing rate at 0.05% at its meeting in Frankfurt on Wednesday, as predicted by all 51 economists in aBloomberg News survey.

The deposit rate and the marginal lending rate stayed at minus 0.2% and 0.3%, respectively.

The ECB is claiming some early successes as the economy picks up. ECB President Mario Draghi said monetary policy is helping the region’s economic recovery and will succeed in boosting inflation. “The implementation of the asset purchase programme is proceeding smoothly,” Draghi said at a press conference in Frankfurt on Wednesday, after the ECB’s Governing Council left interest rates unchanged. “There’s clear evidence that the monetary policy measures we’ve put in place are effective.”.

The ECB embarked last month on its plan to spend ¤60 billion a month on sovereign and private-sector debt. It intends to continue until September next year or until officials “see a sustained adjustment in the path of inflation” toward the mediumterm goal of just under 2%.

The slide in euro-area consumer prices recorded since December is fading, and economic survey data has signaled the regional recovery is accelerating. The IMF increased its economic-growth forecasts for the euro area on Tuesday.

European stocks and bonds have risen. The Stoxx Europe 600 Index closed at a record high on Monday, and Germany’s 10-year bond yield dropped to an all-time low of 0.13% on Tuesday. Investors could still derail the progress if they believe stimulus will decelerate sooner than expected, meaning Draghi might need to play down the idea that the programme could succumb to its own effectiveness.

He may point to economic and political risks still clouding the outlook, including Greece’s ongoing wrangling with creditors over fresh aid.