The European Central Bank has kept interest rates unchanged at a record low 0.25 percent, even though inflation has fallen to its lowest in more than four years.<br /><br />ECB President Mario Draghi and the bank’s policymakers are standing pat even though annual inflation in the 18-member eurozone fell to 0.5 percent in March. <br /><br />The ECB also made no adjustment to the rate it pays to retail banks when they leave money on deposit with it overnight – it remains at zero.<br /><br />In recent weeks, Governing Council members have been willing to publicly talk about the possibility of cutting deposit rates below zero – effectively charging banks to hold cash with the ECB, thereby making it more likely that money will be loaned out to businesses or individuals.<br /><br />They have also spoken about the possibility of embarking on bond purchases as the United States, Japan and Britain have, if the threat of deflation became more acute.<br /><br />The wait and see approach comes despite concerns among some economists that the bloc risks slipping into a spiral of sinking prices and meagre growth.<br /><br />Their view seems to be that the slowdown in inflation is driven by the kind of softer food and energy prices the bank usually judges as temporary.<br /><br />There was little market reaction to the news.
