ECB holds rates ahead of upbeat assessment for eurozone economy

The European Central Bank has kept interest rates on hold for the sixth meeting in a row as Mario Draghi prepares to assess signs of an improvement in the eurozone economy.

The ECB's governing council held the benchmark main refinancing rate at 0.05 per cent, a record low. The deposit rate charged on eurozone lenders' reserves parked at the central bank stayed at 0.2 per cent.

The ECB president, who will meet the press at 1.30pm on Wednesday, is expected to address questions on the region's economic outlook, which has strengthened more quickly than expected.

Official data published on Wednesday showed the value of eurozone goods exports rose by 4 per cent between February 2014 and February 2015, indicating the region's manufacturers are beginning to benefit from the cheaper euro. The value of imports remained the same.

The trade data, coupled with strong industrial production figures and indications from business surveys, show that confidence is returning. The signs have fed speculation that eurozone central bankers will trim the €1.1tn quantitative easing programme unleashed in January.

Mr Draghi is expected to stress that expectations that inflation will rise towards the central bank's target of just below 2 per cent by 2017 depend on the eurozone's central bankers sticking to QE in its current form. Annual inflation is now minus 0.1 per cent.

Slowing the pace of the bank's €60bn a month bond-buying before a self-imposed deadline of September 2016 was not on the ECB's agenda for Wednesday's policy meeting. Any talk of tapering is unlikely to come up, at least until a new set of staff forecasts for inflation and growth is published in June.

The ECB president is also expected to take questions on Greece as officials in Athens prepare fresh measures to secure a new deal with international creditors, which include the eurozone's central bank.

The ECB has allowed the Bank of Greece to raise the amount of emergency funds available to the country's lenders by €800m to €74bn, according to sources quoted by Reuters and Bloomberg.

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