ECB keeps policy on hold, as expected

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The eurozone’s monetary policymakers have kept their aggressive monetary easing in place ahead of the French presidential run-off between centrist Emmanuel Macron and the candidate for the far right, Marine Le Pen.

The European Central Bank’s governing council left its benchmark main refinancing rate at zero and the deposit rate at minus 0.4 per cent. The region’s central bankers will continue to buy €60bn in mostly government bonds under a quantitative easing programme that will run until at least the end of this year.

(Here is the statement from the ECB.)

While the ECB’s actions have helped bolster a recovery that is becoming increasingly strong and broad, monetary policymakers are set to remain cautious about removing their stimulus ahead of a vote that could see a staunchly anti-euro candidate secure residency in the Élysée Palace.

Mario Draghi will present the 25-member council’s statement on economic conditions to the press at 13.30 UK time. Mr Draghi is expected to say that the risks to the outlook remain “tilted to the downside” and that the central bank continues to stand ready to cut rates or expand QE, should those downside risks emerge.

A win for Mr Macron on May 7, as is likely, would remove the biggest political risk to the eurozone’s recovery, which has gone from strength to strength despite the climate of political uncertainty in France and elsewhere.

A poll of economic confidence, published earlier on Thursday by the European Commission, rose to its highest level since September 2007 in April. Monetary stimulus, low oil prices, less austerity and a healthier banking sector have all helped lower unemployment, boost growth and raise confidence among consumers and businesses across the region.

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