2018.07.2608:39:00UTC+00ECB Maintains Status Quo After Announcing QE Exit Plan In June

The European Central Bank left its interest rates unchanged on Thursday and maintained the forward guidance on monetary stimulus, following the Governing Council's June decision to halve the monthly asset purchases after September, and to eventually end them in December.

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 at least through the summer of 2019, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2 percent over the medium term," the ECB said in a statement.

The bank reiterated its guidance for its asset purchases. "The Governing Council will continue to make net purchases under the asset purchase programme (APP) at the current monthly pace of EUR 30 billion until the end of September 2018," the ECB said.

In June, the ECB announced that it hopes to halve its monthly bond purchases to EUR 15 billion after September and to end them in December.

The latest policy decision was in line with economists' expectations.

An end to asset purchases will be "subject to incoming data confirming the Governing Council's medium-term inflation outlook", the bank said.

Euro area annual inflation accelerated in June, exceeding the ECB's target of "below, but close to 2 percent".

However, core inflation that strips the effect of energy, food, alcohol and tobacco price changes eased to 0.9 percent from 1.1 percent in May.

The easing in core inflation shows that the ECB still has a long way to go, to say the least, ING Bank economist Carsten Brzeski said.

"However, do not expect the ECB to deviate from its June assessment. Rather, expect it to focus on the bright side of economic life."

The ECB said it intends to reinvest the principal payments from maturing securities purchased under the APP for an extended period of time after the end of the net asset purchases. ECB President Mario Draghi is set to hold the press conference at 8.30 am ET in Frankfurt.

"Listen out for hints about the shape of next year's reinvestments - rumor has it that the Bank might focus on longer maturity bonds, which could limit the impact of the end of new purchases on longer-term yields," Capital Economics economist Jennifer McKeown said.