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M. Continuo

ECB holds rates, and nerve, in face of deflation risk


    FRANKFURT (Reuters) - The European Central Bank left its main interest rate unchanged at a record low of 0.25 percent on Thursday, holding course despite fears inflation could get stuck in a "danger zone" below 1 percent.

    The decision to leave rates unchanged was expected, though a minority of economists polled by Reuters had expected a cut.

    The ECB also left unchanged the deposit rate it pays on bank deposits at 0.0 percent, and held its marginal lending facility - or emergency borrowing rate - at 0.75 percent.

    Markets now turn their attention to ECB President Mario Draghi's 1330 GMT news conference, at which he will for the first time present projections from the bank's staff stretching into 2016.

    The projections could give the ECB grounds for policy action and investors will be listening for news of a potential move to release billions of euros into the financial system.

    The move, on which an ECB source predicted there would be unanimous agreement, would see the bank end operations to drain funds from the financial system that it spent on a sovereign bond-buying plan at the height of the euro zone crisis.

    (Writing by Paul Carrel Editing by Jeremy Gaunt)