ECB maintains policy despite waning economy

Last Updated Jul 3, 2014 9:30 AM EDT

The European Central Bank kept its interest rates unchanged at its monthly policy meeting on Thursday despite signs that the 18-country eurozone economy is losing momentum.

In his press conference, ECB President Mario Draghi said the recovery in the eurozone was "moderate" in the second quarter and inflation was "subdued." Despite that weak economic backdrop, he said long-term inflation expectations were "firmly anchored" around the target of just below 2 percent.

Last month, the ECB unveiled a raft of measures designed to shore up the recovery and prevent prices from falling -- low inflation, currently at 0.5 percent, is a key concern for policymakers at the ECB. Among the policies announced was a reduction in the ECB's main interest rate to 0.15 percent.

Draghi said key interest rates will remain at current or lower levels for an "extended period of time" and that the ECB's governing council was "unanimous" in its commitment to use other unconventional monetary stimulus measures should inflation stay too low for too long.

Inflation isn't the only thing that the ECB is keeping a close watch on. Figures released Thursday suggest the eurozone has started the summer on a fairly flat footing. Retail sales, according to Eurostat, were flat in May while the June purchasing managers' index -- a gauge of business activity -- from financial information company Markit edged back to a 6-month low.

The high value of the euro is also a cause for concern for the central bank. The currency remains relatively strong, particularly against the dollar, even though the Federal Reserve is discussing when it will start raising interest rates.

The euro fell slightly as Draghi was speaking, though that was mainly due to the bigger than expected 288,000 increase in U.S. nonfarm payrolls in June. The currency was down at $1.3620 from $1.3650 before the payrolls report release. Though it's down on its multi-year high of near $1.40 in the spring, the euro is still markedly above its long-run average.

Draghi also announced that beginning in January, the ECB will hold its monetary policy meetings every six weeks, rather than every month.

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