The European Central Bank (ECB) left interest
rates on hold at their historic low of 1 percent Thursday, despite
fresh pressure on the bank to step up its action to combat the
eurozone debt crisis and faltering economic growth.
The market focus was now expected to be on the press conference of ECB chief Mario Draghi for signs as to whether the bank will be
prepared to launch a new round of stimulus.
In particular, Draghi was likely to be pressed by reporters as to
whether the ECB is considering another rate cut, or additional
emergency measures such as new steps to boost liquidity in the
eurozone financial system.
The bank has already rolled out more than 1 trillion euros ($1.3
trillion) in cheap loans since December and cut interest
rates by a total of 50 basis points in November and December last
year.
But since the last ECB's meeting about four weeks ago, the
economic mood in the currency bloc has become more downbeat.
Data released Wednesday showed unemployment in the region during
March hitting its highest level since the launch of the euro in 1999,
as governments across the region battle on with a tough round of
austerity aimed at cutting high debt-and-deficit levels.
At the same time, a key indicator showed the currency bloc's
manufacturing sector slipping deeper into recession in April.
Thursday's meeting of the ECB's 23-member governing council was
taking place in the northern Spanish city of Barcelona and was one of
the Frankfurt-based bank's regular out-of-town meetings.
But as a reminder of the growing sense of frustration in parts of
the eurozone caused by budget cuts, the Spanish authorities have been
forced to deploy about 8,000 police officers to shield the ECB
members from protesters.
Spain has also faced rising borrowing costs on its debt amid
investor concerns that the eurozone's fourth biggest economy might be
forced to tap into the European Union-led bailout fund to help shore
up its banking system.
