Draghi issues European rates hint

The European Central Bank (ECB) has announced it is holding its base rate of interest for another month, although the head of the body Mario Draghi has hinted rises are on the way.

At a press conference held after the ECB said rates are being held for another month, Mr Draghi stated that the central bank is "not resigned" to keeping a low rate of inflation.

The target rate of inflation has been set by the ECB at two per cent, but it currently stands at 0.7 per cent. Interest rates in Europe are currently at an all-time low and Mr Draghi has previously indicated a willingness to increase them sooner rather than later, although he is in no rush.

Last month, Mr Draghi stated that a clearer picture of the ECB's future economic policy is likely to emerge in June, which might be a hint to investors of when a rate rise could be implemented.

June rise?

Mr Draghi stated at the press conference that the 24-member ECB council was "dissatisfied about the projected path of inflation" and is "not resigned to have too low inflation for too long a time". He added that the ECB was "comfortable with acting next time", raising expectations among commentators that the bank could alter policy in June.

Luke Bartholomew, investment manager at Aberdeen Asset Management, told BBC News: "ECB meetings are starting to have a Waiting for Godot feel: every month we think Draghi can't go any longer without doing something and every month we're left waiting."

Following the comments made by Mr Draghi yesterday (May 8th), the euro fell to below $1.39. Earlier in the day, the single currency had increased to the $1.40 mark for the first time in more than two years.

Interest rates have also been held by the UK this month, with the Bank of England's Monetary Policy Committee announcing the base rate is to remain at 0.5 per cent for another month. This is a record low for the UK.

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