ECB Chief Optimistic On Eurozone Growth Despite Softer Economy

European Central Bank leaves interest rate unchanged, despite slowing of EU economic growth

Highlights - Draghi comments at ECB press conference

"This moderation may in part reflect a pull-back from the high pace of growth observed at the end of past year, while temporary factors may also be at work", he said.

Financial markets expect the European Central Bank to wind down its 2.55 trillion-euro (2.2 trillion pounds) stimulus programme by the end of this year and raise its policy rate for the first time since 2011 towards the middle of next year.

The ECB confirmed expectations by leaving policy unchanged earlier on Thursday, keeping to its commitment to bond-buying at a monthly 30 billion euros ($37 billion) until at least September, with rates on hold "well past" then. As well as waning industrial output and deteriorating business confidence, the threat of a global trade war is hanging over Europe's export-oriented economy. Despite the loss of momentum, Draghi said the underlying strength of the euro area economy continues to support policymakers' confidence that inflation will converge towards the ECB's aim of "below, but close to, 2 percent" over the medium term. It was anticipated that the central bank would adjust its Forward Guidance in June on the basis of the growth and projections available then, therefore given a first hint for the end of net asset purchases.

The bank also reiterated that its bond purchasing scheme would remain at its current monthly pace of €30bn until at least the end of September 2018, or until the council had seen a sustained change in inflation towards its target of almost two per cent.

Draghi told his press conference that while the economic effects of the current tensions so far did not appear to be substantial, it remained unclear what might be the fallout from any retaliation sparked by the US' protectionist stance. However, frequent suggestions of underlying weak inflation have called that timeline into question.

Meanwhile, inflation is yet to show a convincing upward trend, he noted, reiterating the need for "patience, prudence and persistence".

In his opening statement, Draghi repeated a pledge to monitor exchange-rate developments and their potential impact on inflation. Some, however, have started to flag risks of a delay.

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