The European Central Bank (ECB) upgraded its growth and inflation forecasts for this year, but warned of downside risks related to the global economy and the so-called "Brexit" vote in the U.K.
The bank now sees growth of 1.6 percent for 2016, up from a 1.4 percent forecast in March. It left its growth forecast for 2017 unchanged and trimmed its forecast for 2018 to 1.8 percent. Inflation is seen at 0.2 percent compared to a previous forecast of 0.1 percent. Inflation is expected to pick up in the second half of 2016 and recover in 2017 and 2018, ECB President Mario Draghi said at a press conference.
The projections come after the bank left interest rates on hold on Thursday as expected.
"With the latest policy measures only announced in March and some, like the corporate bond purchases and new TLTROs, not even implemented yet, the Governing Council is firmly in wait and see mode for now," Jonathan Loynes, chief European economist at Capital Economics said in a note to clients.
President Mario Draghi said he expected the economic recovery to continue at a "moderate but steady pace"
The ECB left the rate on bank overnight deposits at -0.4 percent, the main refinancing rate at 0.00 percent and the rate on the marginal lending facility at 0.25 percent.