2018.03.0822:29:00UTC+00ECB Keeps Interest Rates Unchanged, to Continue Asset Buying Program

The European Central Bank dropped its easing bias, raising expectations that it will normalize monetary policy in the eurozone.

Until now, the ECB has stated that it stands ready to increase the level of bond purchases it makes in both duration and/or size, in case the economic outlook deteriorates in the eurozone.

However, it recently removed such statement from its communication, following a monetary policy meeting, indicating that stimulus in the region could come to an end in the near future.

ECB President Mario Draghi said that the strong economic recovery in the region supported the decision to remove the so-called easing bias.

The bank has improved its forecasts for real GDP (gross domestic product) since its last forecasts in December. The ECB currently expects real GDP to reach 2.4 percent in 2018, 1.9 percent in 2019 and 1.7 percent in 2020.

As a result, the euro traded higher against the dollar on the more hawkish movement from the central bank.

Draghi said that the ECB is monitoring the exchange rate "with regard to their possible implications for the inflation outlook."

The bank also opted to keep interest rates unchanged and to continue its asset purchase program until September.

It said that "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" that is set to last until September 2018.

For now, the quantitative easing program will continue at the pace of 30 billion euros per month. The bank also said that the stimulus could go beyond September if economic conditions change.