ECB keeps key interest rate at record low

ECB keeps key interest rate at record low - Illustrative image: Source VNA

On Thursday the ECB's rate-setting council said it planned to continue its bond-buying program at 60 billion euros ($A90 billion) a month until at least the end of the year as it waits for annual inflation to climb towards the bank's target of just below two per cent.

"Since the economy is growing at a fair clip and the bank is approaching limits on its asset holdings, we expect to hear further hints that a taper will come next year", said Jennifer McKeown, analyst with the research group Capital Economics.

But complicating the ECB's plans has been the recent strength of the euro, which last week breached the 1.20-dollar mark for the first time in more than two years after ECB chief Mario Draghi said global economic growth was "firming up".

Annual inflation continues to fall well short of the bank's target of just below two per cent, while the stronger euro is exerting downward pressure on consumer prices.

Annual inflation in the 19-member eurozone currently stands at 1.5 per cent.

But signs of how the ECB sees the stronger euro impacting both inflation and economic growth in the currency bloc are likely to emerge on Thursday when Draghi unveils a new set of economic forecasts.

Launched in March 2015, the ECB's quantitative easing scheme is forecast to total 2.3 trillion euros by the end of this year, with the bank only gradually withdrawing its stimulus measures over the course of 2018.

The ECB also decided to hold its deposit rate at minus 0.4 per cent and the marginal lending rate at plus 0.25 per cent.