The European Central Bank, or ECB, has decided to keep its monetary policy unchanged.

The bank raised its 2016 inflation forecast to 0.2 percent from 0.1 percent made in March, but kept forecast for 2017 at 1.3 percent, and for 2018 at 1.6. The forecasts are below the bank's 2 percent target.

ECB President Mario Draghi said it is crucial to ensure the low inflation does not become entrenched in second round effects on wage and price setting.

Draghi also said the bank will act by using all the instruments available within its mandate to achieve its inflation goal.