FRANKFURT: The European Central Bank (ECB) held eurozone interest rates unchanged, as expected, on Thursday, but kept the door open to further action and warned the region’s fragile recovery could be faltering.

The ECB’s decision-making governing council decided to hold the bank’s main refinancing rate steady at 0.15 per cent, the marginal lending rate at 0.40pc and the deposit rate at minus 0.10pc.

No new moves had been expected this month after the ECB unveiled a package of unprecedented measures in June — including negative interest rates and a new liquidity programme — in its battle to prevent the single currency area from slipping into deflation.

Know more: France attacks eurozone policies, warns of deflation

At his regular news conference, ECB president Mario Draghi pledged to “maintain a high degree of monetary accommodation”.

“The key ECB interest rates will remain at present levels for an extended period of time in view of the current outlook for inflation,” he said.

“Moreover, the governing council is unanimous in its commitment to also using unconventional instruments within its mandate, should it become necessary to further address risks of too prolonged a period of low inflation.”

Draghi insisted, however, that the ECB was sticking to its forecast for a “continued moderate and uneven recovery of the euro area economy”.

But he acknowledged there were downside risks, not least from the various flashpoints around the world, notably in Gaza, Iraq and Syria, and also from the Russia-Ukraine much closer to home.

Published in Dawn, August 8th , 2014