The European Central Bank confirmed today it is keeping interest rates at record low of 0.5 per cent.
ECB president Mario Draghi has urged that economic figures have improved over past month and that he optimistic for a very gradual recovery in the embattled region.
Some of the recent eurozone data has had a slightly stronger tone. Purchasing manager index data released from across the eurozone this week highlighted a significant reduction during May, in the rate of decline in the manufacturing.
Many of the key countries in the region including Spain, Italy, France, Germany and even Greece saw significant improvement, with factory activity moving to multi-year high levels. Notably, Greece is currently holding a US based conference in a bid to convince investors to return to the battered nation, with officials urging “the worst” was over.
After leaving interest rates on hold as expected, the ECB is likely to keep a cautiously open mind to both further rate cuts and measures to stimulate the market.
Capital Economics senior European economist Jennifer McKeown says: “Renewed warnings over recent weeks from several governing council members about the potential side-effects of negative deposit rates have perhaps reduced the likelihood of an imminent rate cut.”