ECB's Draghi stands firm on stimulus as inflation ticks up

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Such loose monetary policies are created to boost growth and inflation in the 19-nation euro zone, bringing price increases towards the central bank's target of "close to, but below 2 per cent".

"This is a gradual process", Mr Draghi said. The message, somehow, remained clear enough. But Draghi also acknowledged the upbeat economic outlook by adding later that it's less likely that rates will have to be cut, and that there's no longer a "sense of urgency" in monetary policy.

At the press conference following the policy decision, Draghi said it was too early to declare victory in the ECB's fight for price stability - though "risks of deflation have largely disappeared", reiterating an assessment he made in January. But "the expectation, the probability of an expectation that it will actually materialise into lower level, has gone down", Draghi said.

The euro rose to the day's high at US$1.0605, up more than half a per cent on the day.

Besides, ECB reaffirmed to follow the course determined by the Governing Council Meeting last December, namely to proceed with asset purchase programme (QE) at the current monthly pace of 80 billion euros (84.7 billion USA dollars) until the end of this month and of 60 billion euros from April onward, until the end of December 2017 or beyond if necessary.

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Investors expect the European Central Bank to raise interest rates by March 2018, money market prices show, with some banks forecasting multiple hikes in 2018 on expectations the central bank will wind down stimulus as the European economy improves.

Meanwhile, inflation should reach 1.7 per cent in 2017 and 1.6 per cent in 2018 - up from previous predictions of 1.3 per cent and 1.5 per cent. Inflation feeding through to wages - known as a "second-round effect" - is what the European Central Bank wants to happen now. "Now these risks - some of them - have materialised, but we haven't seen yet a significant economic impact".

Deutsche Bank AG (DB) paced the early gains, with Germany's largest lender rising 3% in Frankfurt to change hands at €18.40 and clawing back almost half of the losses it's suffered since announcing an $8.5 billion capital increase earlier this week.

"We got the confirmation on growth and they're not ready yet to remove the easing bias on forward guidance, so they're certainly not ready to taper", said Richard Barwell, an economist at BNP Paribas Investment Partners in London.