The European Central Bank’s chief Mario Draghi and his policymakers held off from any change in its main interest rate at their monthly meeting on Thursday.
The rate remains at a record low 0.5 percent, and Draghi said borrowing costs will be kept down as long as necessary.
At the same time the Bank’s economists slightly reduced their growth outlook for the eurozone this year, saying output would decline by 0.6 percent.
Draghi told reporters: “The governing council continues to see downside risks surrounding the economic outlook for the euro area.”
They did discussed a raft of other possible policy options if the eurozone economy does not perk up later this year.
Draghi did seem to be only slightly encouraged by recent data saying: “Output has declined for six consecutive quarters, with labour market conditions remaining weak. Recent development in economic sentiment survey data have shown some improvement – from low levels.”
So a gradual recovery from prolonged recession is how the ECB reads the latest surveys of companies.
They showed eurozone business activity shrank in May, but at a slightly slower pace, with downturns easing in France, Italy and Spain, and Germany stabilising.
That sets the region up for growth of 1.1 percent next year according to ECB staffers.
The markets were disappointed that Draghi had nothing further to offer them in the way of stimulus.
The feeling at the bank is that economic conditions did not warrant moves such as making banks pay to park their money with it overnight by taking the deposit rate into negative territory or cutting the main rate from a record low of 0.5 percent.
But these and other unconventional options, including very long-term loans to banks, measures to fire up the market for asset-backed securities (ABS) and tweaks to its collateral framework were “on the shelf”, Draghi said.
“There was a common assessment that the changes that have taken place are not sufficiently one-directional as to grant action now,” Draghi told the news conference after the council’s meeting. “Having said that, as I said before, we stand ready to act.”