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Business

ECB holds rates low amid risks to recovery

As the European Central Bank (ECB) has left key interest rates unchanged, the bank’s president Mario Draghi has indicated they will remain low well into next year. Draghi still sees risks to Europe’s economic recovery.

FILE - In this Aug. 27, 2012 file photo the new headquarter of the European Central Bank rises behind barbed wire in Frankfurt, German. The European Central Bank says the continent's financial system remains fragile and exposed to risks, including a downturn in markets as well as trouble among banks as they face more bad loans in a weak economy. The ECB's latest financial stability review said Wednesday, May 29, 2013, that the weakening of the banking sector threatens to cause a flare-up in the 17country eurozone's three and a half year crisis over too much government debt. (AP Photo/Michael Probst, File)

Symbolbild Bankenrettung EZB Baustelle Europäische Zentralbank

The key refinancing interest rate in the eurozone had been left unchanged at 0.5 percent, the European Central Bank (ECB) announced, following a regular meeting of its monetary policy board on Thursday.

The bank also held its deposit rate steady at zero percent, as well as its marginal lending rate, which currently stands at 1 percent.

Inflation expectations remained anchored, ECB President Mario Draghi told a news conference, adding that there were signs of tentative economic growth in the recession-hit single currency area.

“Our monetary policy stance provides support to a gradual recovery in economic activity in the remaining part of the year and in 2014,” Draghi said.

However, sweeping austerity measures imposed by most eurozone countries would continue to weigh on economic activity, causing eurozone growth to pick up only slowly, he added.

Draghi's comments are seen as an indication that the ECB will continue its expansionary monetary policy. The policy includes that the key interest rate will remain at its historically low level of 0.5 percent, or even lower, until next year. In addition, the bank seems set to stick with its pledge of purchasing the sovereign debt of crisis-hit nations to rescue the euro currency area.

ECB mulls greater transparency

The ECB president also unveiled plans to improve the transparency of the bank's rate decisions through publishing the minutes of its meetings.

There have been calls for greater openness after it transpired that some ECB council members disagreed with further monetary easing at the height of the eurozone debt crisis last year.

Unlike most other major central banks, the ECB has so far refused to publish the details of its meetings.

On Thursday, Draghi said that the ECB directorate would come up with new transparency rules by autumn of this year. He noted, however, that more transparency must not endanger the independence of individual members on the multinational board.

uhe/slk (AP, Reuters, dpa)