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ECB keeps rates steady as deflation fears ease

The European Central Bank (ECB) has left its benchmark interest rates on hold at historic lows in view of an improving inflation and growth outlooks due to be unveiled by the banks chief later today. Meeting in Vienna on Thursday, the ECBs rate-setting governing council decided to leave its main refinancing rate unchanged at zero percent, and the marginal lending rate at 0.25 percent. In addition, the rate for overnight deposits with the central bank remained at minus 0.4 percent, it added. The central bank for the euro area also announced that it would start buying corporate sector bonds on June 8, and offer cheap credits to commercial banks under a program called "targeted longer-term refinancing operation" as of June 22. Asset purchases for growth and higher prices In 2015, the ECB announced it was buying sovereign eurozone debt to the tune of 1.74 trillion euros ($1.94 trillion) at least until March 2017 to lift growth and boost inflation. About two months ago, it launched an additional package of measures, expanding its asset purchases to corporate bonds, and cutting its benchmark interest rate to zero. Moreover, the ECB also introduced negative interest rates for deposits with the central bank under efforts to punish comercial lenders parking their cash reserves there instead of lending money to businesses. And indeed, first-quarter eurzone growth has beaten beating all expectations amid rising business sentiment, a surge in investments and stable household consumption. And against the background of an almost doubling of global oil prices since January, ECB president Mario Draghi is likely to unveil improving inflation and growth outlooks at his news conference scheduled for 1230 GMT Thursday. uhe/mrk (AFP, Reuters, dpa)
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