By CentralBankNews.info
    The European Central Bank (ECB) left its key interest rates steady along with its asset purchase program unchanged  and reiterated that if the outlook were to worsen it “stands ready to increase the program in terms of size and/or duration.”
     The ECB, whose president last month said the threat of deflation was gone and reflationary forces were now at play, also confirmed that it expects key “interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases.”
     The statements by ECB President Mario Draghi in Portugal signaled the ECB was starting to consider winding down its quantitative easing program and follows the governing council statement in early June that ruled out further rate cuts as the risks to its outlook were now broadly balanced instead of tilted to the downside.
     But in today’s statement, the ECB confirmed that asset purchases would continue at the current monthly pace of 60 billion euros until the end of December or beyond, if necessary, to ensure that  inflation is on a sustained path toward 2 percent.
     In June inflation in the euro area declined to 1.3 percent, down from 1.4 percent, but many economists still expect the ECB in September to signal that its asset purchase program will be wound down in light of improving growth.
      Last month the ECB raised its 2017 growth forecast to 1.9 percent from its previous forecast of 1.8 percent, the 2018 forecast to 1.8 percent from 1.7 percent and the 2019 forecast to 1.7 percent from 1.6 percent.
     But at the same time, the ECB lowered its forecast for inflation this year to average 1.5 percent from March’s forecast of 1.7 percent and the 2018 forecast to an even-lower 1.3 percent from 1.6 percent before inflation is seen rising to 1.6 percent, down from its previous forecast of 1.7 percent.

     The European Central Bank issued the following statement:

   

“At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. The Governing Council expects the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases.