A sense of anticipation surrounded Mario Draghi’s appearance at the monthly ECB press conference yesterday, his first since the eruption of the Cypriot bailout debacle last month.

In the end, his appearance was overshadowed by the announcement a few hours previously of a radical stimulus package by his Japanese counterpart. Newly elected Bank of Japan governor Haruhiko Kuroda outlined a bold monetary easing policy, including a plan to double Japan's monetary base, that took everyone by surprise. It was a hard act to follow.

As Mario Draghi set out the reasons behind the decision to keep interest rates at a record low of 0.75 per cent, one couldn't help feeling that the response was a touch anaemic. To be fair, most analysts had expected interest rates to remain untouched, despite the fact that the Cypriot bailout and continued political uncertainty in Italy had stirred some suggestions that a rate cut could be justified.

While Draghi said the bank was “thinking 360 degrees on non-standard measures”, he failed to give detail on what specific measures these might be. He also emphasised that national governments must play a role. “One should always be mindful of what the ECB can do and cannot do. We cannot replace lack of capital in banking system, we cannot compensate lack of action by governments. In many countries the most powerful measure is to pay back the arrears. The ECB cannot replace governments on that front.”

Nonetheless, his assertion yesterday that the ECB “stands ready to act” suggested that the bank could be ready to use “standard” measures at the very least in the near future, with some analysts predicting a 25 basis point cut could be in the offing in May.

The Cyprus bailout has threatened to undo progress made in recent months.

The usually elusive Draghi was well prepared to face questions on the Cyprus bailout, conceding that the original decision to bail-in depositors under €100,000 was misguided.

While stressing Cyprus was not a template, he suggested that the bail-in model was in tune with existing draft plans for EU-wide banking resolution, underlining comments from eurogroup chief Jeroen Dijsselbloem that shifting the burden away from taxpayers and onto private investors will characterise future bailouts. Ultimately Draghi stressed that the handling of Cyprus, while "not smart", was not detrimental.

While contagion may have been kept at bay so far, the continuing political instability in Italy is a worrying undercurrent and might well become the catalyst for a change of policy.