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ECB keeps policy on hold ahead of June showdown

·2 min read

FRANKFURT, April 22 (Reuters) - The European Central Bank left its ultra-easy policy unchanged as expected on Thursday, providing the pandemic-stricken currency bloc with record stimulus even as an accelerating vaccination campaign raises hopes for a rebound.

After raising its support just six weeks ago, the ECB has capped a rise in yields, pinning borrowing costs near record lows to help a battered economy stay afloat until lockdown measures can be clawed back.

Even as it kept the pace of money printing steady, the ECB maintained its longstanding guidance that stimulus could be expanded further, as needed, and a record low deposit rate could still go lower.

"The Governing Council stands ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner, in line with its commitment to symmetry," the ECB said in a statement.

The ECB's next crucial decision is due on June 10, when policymakers have to decide whether to let emergency bond purchases fall after a surge this quarter.

The current wave of the pandemic appears to have plateaued in Europe, the pace of vaccinations is accelerating and the European Union's 750 billion euro recovery fund has cleared a key court challenge, all pointing to a rapid recovery and space for the ECB to ease back on support.

Companies are meanwhile showing versatility in adapting to life under the lockdown and governments are adding to fiscal support measures, ensuring that firms stay afloat.

Some policymakers have already talked about the need to slow bond buys from the summer while others have pushed back on the idea, arguing that such discussion is premature during the third wave of the pandemic.

With Thursday's decision, the ECB's emergency bond purchase quota stands at 1.85 trillion euros ($2.22 trillion) and buys are due to last until at least the end of March 2022. The bank's deposit rate, its de facto main rate, remains at minus 0.5.

Attention now turns to ECB President Christine Lagarde's 1230 GMT news conference.

($1 = 0.8331 euros) (Reporting by Balazs Koranyi; Editing by Catherine Evans)