ECB expects rates to stay low for extended period

As expected, the European Central Bank left interest rates unchanged at its monetary policy meeting on Thursday.

Unexpectedly, however, ECB President Mario Draghi told a press conference after the meeting that the central bank “expects the key ECB interest rates to remain at present or lower levels for an extended period of time”.

Markets predictably jumped in reaction to the announcement. The STOXX Europe 600 rose 2.3 percent and the euro declined 0.7 percent against the US dollar.

New Bank of England governor Mark Carney did not go quite as far as his ECB counterpart. After its meeting on Thursday which left monetary policy unchanged, the BoE said in its statement: “The implied rise in the expected future path of Bank Rate was not warranted by the recent developments in the domestic economy.”

Perhaps the BoE's reticence in comparison with the ECB is because recent developments in the UK economy have actually been quite positive.

Following the robust data earlier this week, a report from mortgage lender Halifax on Thursday showed that British house prices rose 0.6 percent in June. Prices were 3.7 percent higher in the April-June period than a year ago, the sharpest annual increase in nearly three years.