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Banking

ECB holds off policy action until staff forecasts in March

At its latest council meeting, the European Central Bank has refrained from lowering its main interest rate further despite increasing deflation worries. The ECB said it first wanted to wait for new in-house projections.

The European Central Bank decided not to lower its main refinancing rate standing at an already record-low 0.25 percent, ECB officials announced after a regular Governing Council meeting on Thursday.

Additional policy action was put on hold as the bank waited for in-house projections on the state of the eurozone econom

The European Central Bank decided not to lower its main refinancing rate standing at an already record-low 0.25 percent, ECB officials announced after a regular Governing Council meeting on Thursday.

Additional policy action was put on hold as the bank waited for in-house projections on the state of the eurozone economy to come out next month.

The ECB also left unchanged its rate on bank deposits at zero percent and its emergency borrowing rate at 0.75 percent.

All eyes on March

ECB urgently seeking staff

While Thursday's decision to play the waiting game a bit longer did not come as a surprise to most analysts. Pressure had been mounting on ECB President Mario Draghi to eye a further lowering of the benchmark interest rate in order to foster cheaper loans to households and companies and fuel investments.

The ECB said it was aware of the eurozone inflation rate having dropped to an alarmingly low level of just 0.7 percent in January, making next month's new forecasts on economic growth prospects and consumer prices of crucial importance, with the central bank wary of getting stuck in a danger zone below 1 percent of inflation.

"We're convinced core inflation will be considerably lower mid-term than currently expected by the ECB," Commerzbank economist Michael Schubert said in a statement. "Hence I guess the ECB will eventually lower its rate once again."

hg/dr (dpa, Reuters)

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