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ECB leaves rates on hold, waits for historic cuts to trickle down

The European Central Bank (ECB) has left its main interest rates unchanged at record lows, holding off fresh policy action to spur lending and inflation. The ECB is waiting for its latest rate cuts to show an effect.

Following a meeting of its rate-setting governing council, the European Central Bank (ECB) announced Thursday that it was keeping its benchmark refinancing rate at a historic low of 0.15 percent.

The central bank's rate for overnight deposits for commercial banks would remain at

minus 0.10 percent

, the ECB said.

In addition, the bank's marginal lending facility, which is an emergency borrowing rate, remained unchanged at 0.40 percent.

In July, the central bank for the euro currency area decided to cut its three main interest rates to

historically low levels

in an effort to help spur growth in the crisis-hit eurozone.

The move was intended to free up credit, notably in southern cash-strapped states such as Greece and Spain. Moreover, the bank sought to curb

the rising risk of deflation

in the eurozone.

Deflation may be good for consumers but it is bad for an economy and means falling prices, slumping growth and rising unemployment.

Downside risks to eurozone

The ECB noted Thursday that the current recovery in the 18-nation eurozone remained fragile and was facing a number of risks.

"In particular, geopolitical risks, as well as developments in emerging market economies and global financial markets may have the potential to affect economic conditions negatively, including through effects on energy prices and global demand for euro area products," ECB President Mario Draghi told a news conference.

As a result, interest rates in the currency area would remain at the present low levels for an extended period of time, he added.

The bank also announced that it would hold its regular policy meetings every six weeks from January instead of every month at present. The ECB would then start publishing regular accounts of the monetary policy meetings.

uhe/cjc (dpa, AFP, Reuters)

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