The European Central Bank shrugged off some gloomy economic data for Germany, the biggest economy in the 12-country euro zone, and held its key rates steady today.
As widely expected by most economists and central bank watchers, the ECB left the minimum bid rate for its regular refinancing operations unchanged at 4.50 per cent at the regular fortnightly meeting of its governing council.
The bank, which sets monetary policy for the 12-country euro zone, also held steady its other two key rates -- the deposit rate and the marginal lending rate -- at 3.50 per cent and 5.50 per cent respectively.
Few economists had been expecting any change in rates following a surprise quarter-point easing on May 10.
Nevertheless, ECB President Wim Duisenberg was expected to face some tough questioning at a news conference scheduled for after the meeting in the face of the latest batch of weak German economic data and the poor showing of the euro on the world's foreign exchange markets, economists said.
The euro, struggling to keep its head above 0.85 dollars all this week, was changing hands at 0.8471 dollars shortly after the decision.
Many observers blame the latest bout of weakness of the single currency on the ECB itself and its apparent inability to explain its monetary policy decisions clearly.
ECB watchers complain that the bank failed to provide a convincing explanation for its surprise decision to trim 0.25 percentage point off its key "refi" refinancing rate to 4.50 percent last month.
All the signals coming from bank beforehand had appeared to rule out any such move.
Mounting evidence that the euro-zone economy is not in such good shape as ECB officials would appear to believe is also undermining confidence in euro, economists say.
AFP