The European Central Bank kept interest rates steady on Thursday despite a fall in inflation to its lowest in more than four years, counting on the euro zone recovery to gain strength unaided.
The ECB held its main interest rate at a record low of 0.25% and the rate for bank deposits at central banks at zero, refraining from taking more drastic measures in the face of fears that the euro zone could slip into deflation.
A slowdown in euro-zone inflation in March to levels last seen when the economy was deep in recession in 2009 came as a surprise, but because it was driven by the kind of softer food and energy prices the bank usually judges as temporary it kept its course.
The focus now shifts to a news conference with ECB President Mario Draghi, where he is expected to explain the central bank's decision and markets will watch out for any comments that may indicate possible action ahead.
Policymakers have been willing in recent weeks to publicly broach cutting deposit rates below zero - effectively charging banks to hold cash with the ECB - or embarking on bond purchases as the United States, Japan and Britain have, if the threat of deflation became more acute.
Draghi is likely to want to play up the ECB's readiness to tackle downside risks to inflation, in order to stem a rise in the euro, which last month hit its highest level against the U.S. dollar since October 2011 and has a dampening effect on import prices the more it climbs.
Last month, the ECB forecast it would take 2-1/2 years for inflation to rise to 1.7%, which even then would barely meet the target for annual price growth below but close to 2%.
That was insufficient to prompt a majority of policymakers to back more monetary stimulus at the time, and to change their minds now would have gone against the central bank's practice of not reacting to short-term moves in data.
That said, the ECB did cut its main interest rate in November after a surprise drop in inflation in October to 0.7%.
Other economic indicators are similar to last month's, suggesting the ECB outlook that the euro-zone will record economic growth of around 1.2% this year - the highest since 2011 - holds good.
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