The European Central Bank kept its key interest rates unchanged on Thursday, in line with expectations, but at the post-meeting press conference, the central bank chief is expected to signal a rate hike for July.

The Governing Council kept the main refinancing rate at 1.25 percent at the meeting held in Frankfurt. The rate on the marginal lending facility was retained at 2 percent, while the rate on the deposit facility was left unchanged at 0.50 percent.

In April, the central bank delivered its first rate hike in nearly three years amid spreading debt woes in the Eurozone periphery. The central bank lifted its key interest rate by 25 basis points from a record-low.

During the post-announcement press conference due to start at 8.30 am ET, ECB President Jean-Claude Trichet is expected to signal a hike for July. Although the central bank never pre-commits, he is widely expected to use some code words such as "strong vigilance" to suggest the next hike.

"Although activity data across the region have had a rather softer tone in recent weeks, that is unlikely to have eased the ECB's inflation worries by enough to bring the tightening to a halt after just a single hike (in April)," said Jonathan Loynes, an economist at Capital Economics.

"The bank will want to send another signal that it is not prepared to set conventional monetary policy to accommodate the peripheral economies' problems when both growth and price pressures in the core are quite strong."

Economists are looking forward to more rate hikes beyond the possible one in July. Growth in the single-currency economy appears to be slowing, but inflation remains high, supporting calls for more tightening. The ECB staff's latest macroeconomic projections are set to be announced during the press conference, and they are expected to be upwardly revised.

Trichet is also expected to reveal some changes to the central bank's liquidity support measures. The central bank is expected to continue providing unlimited liquidity to lenders against the backdrop of rising market concerns about the Greek debt crisis.

Greece, which became the first recipient of an IMF-European Union sponsored bailout worth EUR 110 billion last year, is expected to receive the next tranche of bailout totaling EUR 12 billion in July. Athens has agreed to implement a medium-term fiscal strategy, which would be the basis for further aid.

Meanwhile, Eurozone finance ministers are set to discuss a second rescue package for Greece on June 20. The size of the new bailout is estimated between EUR 70 billion and EUR 100 billion, reports said.

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