European Central Bank Keeps Rates Unchanged as expected

The European Central Bank policy on hold. There was nothing dramatically new in the statement. In the subsequent press conference ECB chief Draghi remained adamant that the quantitative easing program would remain in place at least until September next year even in the light of recent encouraging activity and CPI data. 

Marginally revised ECB staff projections were conditioned by that policy assumption. Draghi acknowledged that uncertainty around the forecasts increased in the out years, but retained the forceful language (essentially that QE WILL remain in place as planned:  no conditional mood here!) . 

Despite being questioned several times on this point Draghi gave no hint that there was any possibility of early tapering of the QE program and he said the Council had not discussed any exit plan, because inflation was still so far from being where the ECB wanted it to be. 

These points saw the euro depreciate somewhat, although he also clarified that there was no case for further extension of the QE program: it was technically a possibility but the risks had not intensified to the downside to justify any such policy adjustment. This goes some way towards explaining why bond yields rose right across Europe during the press conference.