ECB holds monetary policy but ready to act next time

The European Central Bank left its benchmark interest unchanged at 0.25 percent at its monetary policy meeting on Thursday.

However, at a news conference after the meeting, ECB President Mario Draghi said that the Governing Council is “comfortable with acting next time”. He said that the “strengthening of the exchange rate in the context of low inflation is cause for serious concern”.

Also possibly of some concern is a report on Thursday showing that German industrial production fell 0.5 percent in March, reversing most of the 0.6 percent rise in February.

Nevertheless, the Economy Ministry said that industrial output in the first quarter as a whole rose by 1.2 percent compared with a 0.7 percent increase in the previous quarter.

Also on Thursday, the Bank of England kept its benchmark interest rate unchanged at 0.5 percent at its monetary policy meeting.

The Federal Reserve is also unlikely to change interest rates soon. While there was no monetary policy meeting at the Fed on Thursday, Chair Janet Yellen did meet the Senate Budget Committee and told them that “interest rates are unlikely to begin rising until we are in a strong economic recovery”.

Whether the major global economies sustain strong recoveries could depend on China sustaining its growth. On this front, the news on Thursday was encouraging.

China's exports rose 0.9 percent in April from a year earlier while imports rose 0.8 percent. While the increases were small, they put an end to the recent run of year-on-year declines in Chinese trade data.