European Central Bank expected to keep taps open as economic outlook uncertain

On the other hand, European Central Bank bumped up its growth estimates for Europe and removed a reference in its policy statement on further interest rate cuts.

"Currency markets are watching the United Kingdom election, the ECB meeting tomorrow and then casting eyes forward to the Federal Reserve meeting next week", said Bill Northey, chief investment officer at the private client group of U.S. Bank in Helena, Montana.

Policymakers left the ECB's monetary policies unchanged but tweaked its so-called forward guidance on the future direction of interest rates.

Eurostat said the 19-country euro zone expanded by 0.6 percent quarter-on-quarter and by 1.9 percent year-on-year.

The same pattern was repeated with a spike in April, to 1.9 percent, before a retreat in May.

The bank trimmed the inflation projections to mainly reflect lower oil prices. That is below its target of just under 2 percent.

"If you look at the pace of inflation excluding energy and food, you realize that we are back to a rate that we've seen many times before, namely 0.9 percent", said Michael Schubert, ECB analyst at Germany's second-largest lender Commerzbank.

"We have to be confident that the inflation rate is durably converging toward our objective and that it's a self-sustained convergence", Draghi said.

If a rate is negative the bank will pay the ECB (rather than receiving money in interest).

With Thursday's decision, the ECB's deposit rate, its key policy tool, remains at minus 0.4 percent.

This breaking news story is being updated as more information emerges - please refresh the page for the most recent version.

The bank took a tiny step toward an eventual exit from the stimulus by dropping wording in its statement saying it could lower interest rates even further. However, it appeared to depart from its previously cautious stance and closed the door on further loosening if the economy keeps its momentum.

Draghi dampened expectations of an end to the ECB's massive stimulus programme anytime soon as he highlighted the subdued outlook for Eurozone inflation.

Measures of underlying inflation remain low and have yet to show convincing signs of a pick-up, as unutilized resources are still weighing on domestic price and wage formation, Draghi said.

Bloomberg, citing unnamed euro zone officials, said the central bank was preparing to lower its annual inflation forecast for the next three years to 1.5 percent, from 1.7 percent, 1.6 percent and 1.7 percent, respectively. Its monthly asset purchases will continue to total 60 billion euros a month and to run until at least December.

Mr Draghi stressed that there is no end on the horizon to the ECB's easing programme, which involves buying €60bn-worth of bonds each month to flush more cash into the economy. Even if it accelerates to 1.7 per cent in 2019 as predicted, that's still not enough, given that the European Central Bank views the rate as a marker for where headline inflation will settle.

The European Central Bank (ECB) upgraded its growth outlook for the eurozone on Thursday and gave a less dovish signal on interest rates in what was the euro area monetary authority's first effective tightening of policy since former ECB president Jean-Claude Trichet hiked rates in 2011. In the previous quarter, GDP had risen by a revised 0.5%, while the preliminary print indicated an expansion of 0.5%.

Borrowers in Ireland with tracker mortgages and the Irish State have been among the big beneficiaries from the policy, seeing their interest bills fall to extraordinarily low rates for a sustained period.