ECB holds rate steady, as expected

    The European Central Bank (ECB) kept its benchmark refinancing rate steady at 0.75 percent, as expected, and said it's president, Mario Draghi, would comment on the governing council's decision at a press conference later today.
    The inflation rate in the 17-nation euro zone fell to 1.7 percent in March from February's 1.8 percent, further under the ECB's target of inflation that is below, but close to 2 percent.
    Although most economists had expected the ECB to keep rates steady, a growing number are expecting the bank to signal that it may ease policy later this year if the economy remains weak.
    The euro zone's Gross Domestic Product contracted by 0.6 percent in the fourth quarter of 2012, the fifth quarterly contraction in a row, for an annual drop of 0.9 percent, wider than the 0.6 percent decline in the third quarter.
    The jobless rate in the 17 nation area was unchanged at 12.0 percent in February with rates in Greece and Spain above 50 percent.
    Last month the OECD said there was a strong case for the ECB to ease its policy given weak demand and inflation that is below its objective.

    "The risk of undue inflationary pressure associated with monetary easing is small, as the transmission mechanism is impaired, especially in the periphery countries where banks face high funding costs," the OECD said in its interim economic report.


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