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ECB calms markets with unchanged interest rates

ECB calms markets with unchanged interest rates

That means that for the time being its bond buying programme will remain capped at €60 billion per month and its interest rates - a deposit rate of -0.4% for banks, and a base interest rate of 0.0% - will be maintained.

With the euro zone economy now growing for the 17th straight quarter, its best run since before the 2007-08 global financial crisis, the European Central Bank is growing more confident with the outlook, supporting Draghi's suggestion of easing off the accelerator after printing almost 2 trillion euros to jump start growth.

Nevertheless, the president's comments "opened the back door to announce a reduction in monthly bond purchases from next year in September or October", commented analyst Kristian Toedtmann of Deka bank. Inflation remains at 1.3 percent, well below the bank's goal of just under 2 percent it considers best for the economy.

Anglo-Dutch conglomerate Unilever rose 1.7 percent after reporting slightly weaker than expected quarterly sales, but reaffirmed it was sticking to its full-year target. The reason is because there is nothing new from today's meeting, the European Central Bank statement is virtually unchanged from last time and no news means no change in the euro's trend, which is higher, ' said Kathleen Brooks, research director at City Index.

Assuming the European Central Bank don't make any policy changes today, the big moment will be Draghi's press conference at 1.30pm BST.

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Commerzbank described the speech as the "beginning of the end" of quantitative easing (QE) in the euro zone, noting that the rise in German yields was in line with the rise seen in U.S. Treasury yields in the weeks after the U.S. Fed signalled an unwinding of its QE programme in May 2013 in what became known as the "taper tantrum".

Earlier on Thursday, the Governing Council left all the three interest rates and its Euro 60 billion monthly asset purchases that are set to run until the end of the year, unchanged.

Speculation was ratcheted up yet further when Draghi told a central banking conference late last month that "as the economy continues to recover. the central bank can accompany the recovery by adjusting the parameters of its policy instruments". Even though the change in employment, at 14K, came in 1,000 short of expectations, the encouraging sign in Australia's labor market was the rebound in full-time employment in June that reached 62K.

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But Mr. Draghi will probably avoid sending strong signals one way or another. The company said it expects full-year underlying operating margin to grow by at least 100 basis points, as against 80 basis points projected earlier. The bank has said it won't raise its benchmark interest rate from zero until the purchases end.