The European Central Bank on Thursday kept key interest rates for the region unchanged.
ECB President Mario Draghi said in an introductory statement at a news conference announcing the monetary policy decisions that interest rates will remain at present levels for "an extended period of time and past ECB's net asset purchases" scheduled to expire in September.
The interest rate on the main refinancing operations of the eurosystem, which provides the bulk of liquidity to the banking system, was kept at zero. Overnight credit for banks, known as the marginal lending facility, was kept at 0.25%, while the interest rate on the deposit facility, which banks in the region may use to make overnight deposits, was held at -0.4%.
"Underlying inflation was subdued in the first quarter and is yet to show signs of an upward trend," Mr. Draghi said.
However, Mr. Draghi said he was "cautious but confident" that the ECB's inflation target will be met before the ECB moves to increase interest rates.
Mr. Draghi said that an overall ample degree of monetary policy support for headline inflation development over the medium term is needed to reach the target of just below 2%. "Headline inflation is expected to hover around 1.5% for the remainder of the year," he added.
The ECB governing council confirmed Thursday that the net asset purchases at a monthly pace of €30 billion ($37 billion) will continue until the end of September, or beyond, as previously communicated. "We haven't discussed it," Mr. Draghi said.
The central bank will continue to reinvest the principal payments from maturing bonds purchased under its quantitative easing program for an extended period of time after the end of its net asset purchases, the council confirmed.
Mr. Draghi commented that the recent increase in U.S. Treasury yields was to be expected because of the different position of the business cycle in the U.S. economy and the recent measures concerning fiscal expansion. "It was a natural development," he said.