The European Central Bank has decided to keep interest rates on hold at its monetary policy meeting.
The headline rate remains at zero per cent, the deposit rate at negative 0.4 per cent and the marginal lending facility at 0.25 per cent.
It has confirmed its asset purchases will remain unchanged at €80bn a month until March 2017 – or longer if needed.
In the aftermath of the Brexit vote, the ECB stated it was ready to provide additional liquidity if needed, in euro and foreign currencies.
It also confirmed its commitment to price and financial stability by whatever measures were necessary.
Eurozone GDP growth slowed to 0.3 per cent in Q2 after a recovery of 0.5 per cent in the first quarter.
IHS Global chief UK and European economist Howard Archer says the ECB had a basis to expand its monetary stimulus with more quantitative easing but not with an extra cut in interest rates.
Archer says: “Pressure for ECB action has been lifted by the purchasing managers reporting that overall eurozone services and manufacturing output growth eased back to a 19-month low in August and the European Commission reporting that overall business and consumer confidence dipped to a five-month low.
“Meanwhile, eurozone consumer price inflation was only stable at 0.2 per cent in August with core inflation edging down to 0.8 per cent from 0.9 per cent.”
Royal London Asset Management economist Ian Kernohan says: “Although growth forecasts have been trimmed, Mario Draghi did say the ECB did not discuss extending quantitative easing.
“So far the eurozone economy has dodged the Brexit bullet, however growth remains tepid, inflation is far below target and political risks are growing, including potential fallout from the Brexit negotiations.
“We still think the ECB will move to ease policy further, while the Federal Reserve is clearly biased towards tightening monetary policy and raising rates in the future.”