Finland Times

 

Photo AFP-Lehtikuva

The European Central Bank (ECB) on Wednesday decided to keep key interest rates unchanged because of a rise in inflation in May.

     

The interest rate on main refinancing operations and on the marginal lending and deposit facilities will remain unchanged at 0.05 percent, 0.3 percent, and negative 0.2 percent respectively.

     

The annual Harmonized Index of Consumer Prices (HICP) inflation was 0.3 percent in May, up from no inflation in April, according to the flash estimate of Eurostat.

     

"Annual HICP inflation is expected to remain low in the months ahead and to rise towards the end of this year," said ECB president Mario Draghi at a press conference following the governing council meeting here.

     

With regard to the bond purchasing program, or quantitative easing, Draghi said asset purchase programs were proceeding well. The monetary policy measures have contributed to a broad-based easing in financial conditions, a recovery in inflation expectations, and more favorable borrowing conditions for firms and households, he said.

     

The real gross domestic product (GDP) in the euro area rose by 0.4 percent in the first quarter, up from 0.3 in the last quarter of 2014. According to Eurosystem, the monetary authority of the eurozone, it's June 2015 projections are that the annual real GDP will increase by 1.5 percent in 2015 in the euro area, 1.9 percent in 2016 and 2.0 percent in 2017.

     

Draghi repeated that the asset purchase programs would run until the end of September 2016 and be extended if needed according to the plan.