Europe in focus as ECB keeps rates on hold and Britain votes

Each month, the bank has been purchasing 60 billion euros ($68 billion) in government and corporate bonds from banks. During a news conference ECB President Mario Draghi called the risks to the growth outlook "broadly balanced" but emphasized that inflation in the region is still sluggish, justifying the "very substantial degree" of monetary stimulus.

According to the statement, the bank expects that interest rates will be held at present levels for an extended period and well past the horizon of net asset purchases. Reports released yesterday citing unnamed official sources indicated that the Central Bank will lower the inflation forecast for the next three years.

"This is a small, but significant, change in the bias of interest rates setting", Pantheon Macroeconomics' Chief Eurozone Economist Claus Vistesen writes in an emailed note.

The ECB's governing council usually meets at the bank's headquarters in Frankfurt, but visits other European central banks once a year.

"The ECB is essentially in a holding pattern", said Patrick O'Donnell, a fund manager with Aberdeen Asset Management in London.

The ECB also confirmed that it made no changes to its monthly purchase of €60bn assets would continue.

Oil edged up, having hit one-month lows the previous day after an unexpected surge in US inventories and the return of more Nigerian crude to an already oversupplied market. The euro zone economy is strengthening, according to the new European Central Bank forecasts published yesterday, and taking account of the upward revision in first quarter growth to 0.6%, it could grow by 2% in the full year, Draghi said.

The euro area growth forecast for this year was raised to 1.9 percent from 1.8 percent. Comey declined to say whether he thought the president was looking to obstruct justice, deferring to others including the special counsel conducting a criminal investigation of Russian interference in the US election.

The impact on the single currency was limited as the lower inflation projections were offset by higher growth expectations. The written account of the bank's deliberations at its April 27 meeting indicated it felt inflation pressures remained "subdued and had yet to show a convincing upward trend". The dollar recovered some of its losses against the safe-haven yen, up 0.3 percent to 110.11 yen per dollar.

But analysts saw the decision to drop the rate cut wording as a sign that the bank might be getting ready to wind down its stimulus program, which began in March 2015.

The euro fell after the European Central Bank cut its forecasts for inflation and said policymakers had not discussed scaling back its massive bond-buying programme.

The ECB targets headline inflation in the euro zone. The ECB cut the estimate for consumer price inflation (CPI) for 2017 to 1.5% from 1.7% previously.

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