ECB confirms its policy, extends QE until year end

The European Central Bank (ECB) left its benchmark interest rate unchanged on Thursday and dropped any reference to a future rate cut.

In a statement it said it expected interest rates to "remain at present levels for an extended period of time," but added that it would be ready to extend its quantitative easing (QE) program if needed. 

Governor Mario Draghi said at a news conference Thursday that risks to growth are now "broadly balanced." At the bank's last meeting in April, Draghi said risks were "tilted to the downside." He added that inflation remains subdued.

The widely expected change in the wording reflects an acceleration of the bloc's economic recovery in recent months and is likely to be taken as a sign that the ECB is preparing for an eventual withdrawal of its aggressive stimulus measures. Analysts think the bank might announce that in September.

The Central Bank left its bond purchase stimulus unchanged at € 60 billion per month through at least the end of the year and longer if necessary. The measure pumps newly printed money into the economy in an effort to raise inflation toward the bank's goal of just under 2 percent considered best for the economy.

While Euro-Zone monetary policy remains highly stimulative, the change implies that the ECB could begin tapering its stimulus in due course as economic growth picks up and its inflation forecasts come down. In response to the statement, the Euro fell sharply against the US Dollar.