European Central Bank leaves policy on hold as it winds down to its summer vacation

• The European Central Bank left monetary policy unchanged at its July meeting.
• This was widely expected, with most analysts forecasting little change in the last meeting before the central bank’s summer break.
• Quantitative easing in the eurozone will end at the end of 2018, the ECB reaffirmed.

LONDON – The European Central Bank left its monetary policy entirely unchanged at the July meeting of its governing council on Thursday, as had been expected.

That means a base deposit rate of -0.4%, and a quantitative easing program of €30 billion per month – a figure that will be reduced to 15 billion euros per month from September as the bank winds down its bond buying. The ECB will cease purchasing bonds from the end of 2018.

The bank continued, however, to hint that an interest-rate hike could be on the way in the next year or so.

“The Governing Council expects the key ECB interest rates to remain at their present levels at least through the summer of 2019,” it said in a statement, adding “in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2% over the medium term.”

The meeting was always expected to be uneventful, with economists unanimous in their beliefs that policy would be unchanged. July’s meeting is the last before the central bank’s extended summer break, and is traditionally lacking in any significant action.

At 1:30 p.m. BST (8:30 a.m. ET), the ECB’s president, Mario Draghi, will speak to reporters, discussing the bank’s thinking surrounding its decisions.

“The tone of the press conference is likely to be fairly positive, with recent economic indicators supporting the ECB’s view that growth has picked up a little since the start of the year,” Jennifer McKeown, chief European economist at Capital Economics said in an email.

“The ceasefire agreed by President Trump and Mr Juncker yesterday has arguably reduced the threat from trade tariffs, which was the key downside risk that the ECB highlighted last month,” she added.

The euro was little moved on the decision, reflecting the fact that it was in line with market expectations. Here’s how it looked against the dollar a little less than 15 minutes after the announcement: