FRANKFURT, Germany – The European Central Bank kept its key interest rate on hold Wednesday, as expected, leaving investors to look ahead to President Mario Draghi's comments due later, particularly for any news about Greece.
The ECB is a key player in keeping Greece afloat since it has been letting the country's banks tap emergency credit they can't get elsewhere due to the country's difficult situation.
The central bank for the 19 countries that use the euro has been pushing for Greece and its creditors — the other eurozone governments and the International Monetary Fund — to agree on loan conditions and avoid a messy default. The ECB is also owed money by Greece, since it holds Greek bonds on which payment is due in July.
Greece has pushed back against politically painful loan conditions requiring it to reduce its deficit, cut pensions and change labor laws to make the economy more investment-friendly.
Ahead of Draghi's news conference, the bank's governing council left its benchmark interest rate unchanged at 0.05 percent. The decision was expected because the bank has said the rate is as low as it can go.
Aside from Greece, Draghi is expected to underline that the ECB will carry out in full its 1.1 trillion euro ($1.2 trillion) monetary stimulus. The stimulus, dubbed quantitative easing, is injecting 60 billion euros in newly-printed money into the financial system through purchases of government and corporate bonds.
The aim is to raise inflation closer to the bank's goal of just under 2 percent. Very low inflation has raised fears of long-term stagnation in the currency union. Low inflation is a sign of weak demand and can make it harder for indebted governments and consumers to reduce their debt burdens.
Preliminary signs suggest the program is working, as price rose 0.3 percent in May after a zero annual increase in April. Still, Draghi wants to dispel any suggestion that a brightening economic picture could lead the bank to prematurely scale back the bond purchases before the full 1.1 trillion euro goal is accomplished in September 2016.
The eurozone economy grew 0.4 percent in the first quarter, an improvement as the currency union struggles to work off a crisis over too much government and bank debt. But unemployment remains high at 11.1 percent. Economists say stronger growth is needed to bring the long-term unemployed back into the labor force.