ECB ready to act to boost economy, leaves interest rated unchanged for now

The European Central Bank left interest rates unchanged at its final policy meeting of the year.

Last month ECB head Mario Draghi surprised financial markets with a cut in the main rate to a record low of 0.25 percent.

Now he says the bank is ready to take fresh policy action to support the eurozone economy, but has not yet worked out a detailed plan of how to do that.

Draghi told reporters at a news conference: “Our monetary policy stance will remain accommodative for as long as necessary and will thereby continue to assist the gradual economic recovery in the euro area.”

He added: “At the same time unemployment in the euro area remains high, and the necessary balance sheet adjustments in the public and the private sector will continue to weigh on economic activity.”

The bank’s latest forecasts for inflation in the eurozone over the next two years are well below its target of around two percent – 1.1 percent in 2014 and 1.3 percent in 2015 – which mean it can keep rates low without fear of sparking inflation.

Its growth predictions were raised slightly, but the bank’s experts still see only sluggish expansion of 1.1 percent next year and 1.5 percent in 2015.

Many economists think the ECB should issue a new round of long-term low-interest loans to the region’s banks.

Draghi said they would only do that if they are sure the money would be used to boost the economy, with the banks actually loaning it on to businesses and individuals.