FRANKFURT, Germany, June 6 (UPI) -- The European Central Bank left its monetary policy unchanged Thursday, explaining that the rate cut in early May has been justified by incoming data.
The ECB cut its overnight lending rate in May from 0.75 percent, where it had been since July 2012, to 0.5 percent as the eurozone notched its sixth quarter of recession.
"Incoming information has confirmed our assessment which led to the cut in interest rates in early May, " ECB President Mario Draghi said at a press conference in Frankfurt, Germany.
He said "medium-term inflation expectations ... continue to be firmly anchored in line with our aim of maintaining inflation rates below, but close to 2 percent."
It is considered healthy for prices to rise at a modest pace, as prices are opportunistic and do not rise, generally, beyond the means of customers to keep up. Therefore, a healthy inflation rate is reflective of healthy customers.
Under the same logic, high unemployment tends to put pressure on prices, keeping inflation low.
Draghi also said that demand for exports should rise as other economies recover from the global economic slowdown.
That should help fuel a recovery in Europe, he said. In the meantime, "domestic demand should be supported by the accommodative stance of our monetary policy and by the recent real income gains due to lower oil prices and generally lower inflation," he said.
