European Central Bank officials voted Thursday to hold interest rates steady, even as the euro area economy slides towards recession.
In a widely expected move, the ECB left its main overnight lending rate at 1%, a level the bank has maintained since late last year.
The Governing Council of the Frankfurt-based ECB met in Barcelona as the economic outlook in the euro-zone has deteriorated.
Spain, for example, confirmed earlier this week that it officially slipped back into recession in the first quarter. Meanwhile, unemployment in the 17 nations that use the euro edged up to 10.9% in March -- the highest level since the common currency was introduced in 1999.
Overall, the euro-zone economy is widely expected to suffer a mild recession this year as austerity -- budget cuts and tax hikes -- take a toll on growth.
In addition to Spain, several other eurozone economies already struggling with recession, including Italy, Ireland, Greece and Portugal.
But there is increasing concern that austerity is actually doing more harm than good, and a growing number of policymakers have been calling for reforms to boost economic growth.
To be sure, the ECB has taken unprecedented steps to support the economy.
In two separate operations, the ECB funneled more than one trillion euros worth of ultra low-cost loans into the banking system. The two long-term refinancing operations, or LTROs, helped prevent a credit crunch in the banking system.
The LTROs also appeared to drive down borrowing costs for troubled euro-area governments including Italy and Spain. But the effects of the lending program have waned and some investors are now calling for the ECB to do more.
