No ECB rate cut

The European Central Bank (ECB) on Thursday stuck to its main interest rate of 0.75 percent, once again deferring a cut in already low borrowing costs that only a minority of analysts had expected.

But many economists insisted the ECB would cut its benchmark rates later in the year, with a sharp downturn taking hold across the 17-member eurozone.

"Economic activity in the euro area is expected to remain weak," ECB President Mario Draghi told reporters in Frankfurt at a regular monthly news conference. He added that recent economic surveys did not signal any improvement heading to the end of 2012.

One year in office

Draghi reiterated his view that inflation would not turn into a major worry in the eurozone. Prices rose by 2.5 percent in the bloc in October. The ECB said inflation would fall below 2 percent next year, that's below the central bank's own target.

The ECB President indicated it was waiting for Spain and other indebted nations to trigger its bond-buying program. He said no request had been made so far, but insisted that the very announcement of the bank's willingness to buy up sovereign debt from strained governments had been calming markets.

Thursday's ECB meeting took place one year after Draghi took over the job as guardian of the euro currency. During his time in office, he has cut interest rates three times and pumped more than 1 trillion euros ($1.27 trillion) into the region's financial system through extremely cheap loans. Lenders have made ample use of the offer, but have so far failed to make sufficient amounts of financial resources available to companies and private households in fear of credits not being repaid.

hg/kms (Reuters, dpa)