ECB keeps rates unchanged as crisis eases

The European Central Bank left its key interest rate unchanged on Thursday at a record low of 1 percent, holding off on further measures to boost the shaky economy in the 17 countries that use the euro.

Market concern over some debt-stricken European governments such as Spain and Italy has eased recently, and investors and analysts are waiting to see whether ECB president Mario Draghi gives a slightly more upbeat assessment of prospects for growth.

Recent indicators suggest the current economic slowdown across Europe might not be too deep. That would give the bank a reason to hold off on more cuts.

The ECB is waiting to see whether its more than euro1 trillion in cheap, three-year loans to hundreds of banks handed out in December and again last week will result in more lending to businesses and consumers. The loans have helped steady wobbly banks and lowered borrowing costs for indebted governments like Italy and Spain.

With markets now more stable, and inflation still higher than the bank likes to see, most analysts expect the 23-member governing council to decide to leave interest rates at 1 per cent - probably for several months - and hold off on more emergency measures such as the cheap loans.