Following data last week that showed consumer price inflation across the Eurozone rose from 0.0% to 0.3% in May, the European Central Bank (ECB) decided to leave its three policy rates unchanged. The main refinancing rate was left at 0.05% while the deposit rate remains negative at -0.2%, with the marginal lending facility at 0.3%. Additionally, no changes were made to the size or longevity of its quantitative easing programme of €60bn in monthly asset purchases.

According to Capital Economics (CE), ‘the Eurozone economy appears to have turned a corner since the start of the year. The currency area grew by 0.4% in the first quarter of 2015, the fastest rate since Q2 2013. Further, inflation, having dipped to -0.6% in January has picked up strongly in recent months and unemployment fell to 11.1% in April, the lowest rate in three years. The Eurozone economy has benefitted from the fall in oil prices and the ECB’s stimulus plan, which has helped lower borrowing rates and the value of the euro and boosted confidence across the region.’

However, CE also reported: ‘While the economic picture has brightened, the ECB’s job is by no means done. The introduction of QE has provided a much needed boost but it seems unlikely that the economy has yet generated the momentum required to support a sustainable recovery.’