Draghi keeps rates steady

The European Central Bank decided to leave its historically low refinancing rates unchanged, with its benchmark interest rate standing at just 0.5 percent.

The ECB's reluctance to either lower or increase the rates was widely seen by analysts as an attempt to keep from nipping the euro area's nascent recovery in the bud.

The monthly policy meeting in Paris came at a time of renewed market uncertainties prompted by the US government shutdown and initial concerns sparked by a now defused coalition crisis in Italy.

Weak upswing

The meeting also came after concerns that a move by the US Federal Reserve to tighten monetary policy could send borrowing rates higher across the world and might consequently undercut eurozone recovery.

The ECB said it was aware there had been signs of an economic pickup in the eurozone of late, but indicated the recovery had been too weak to allow the central bank to seriously mull monetary tightening.

In comments to the European Parliament, ECB President Mario Draghi had indicated the bank stood ready to introduce new measures if need be to keep money market rates low through even another long-term refinancing operation for banks.

While it ruled out a change in its interest rates for now, the ECB might consider lowering them later in the year as a recent drop in annual inflation in the area using the euro could give it more room for maneuvering.

hg/kms (dpa, Reuters)