FRANKFURT — The European Central
Bank left its benchmark interest rate unchanged on Thursday, once again defying
criticism that it is doing too little to counteract very low inflation that
some economists see as a grave threat to the euro zone economy.
The central bankers, meeting in Brussels, left the main rate at
0.25 percent, a record low. While many economists have called for more decisive
action to stimulate the euro zone economy, members of the bank’s governing
council appear reluctant to deploy the more radical measures that would be
required to do so.
“There is consensus about being
dissatisfied with the projected path of inflation,” Mr. Draghi said. “There is
a consensus about not being resigned and accepting this as a fact of nature.”
But he declined to offer specifics about the possible next
steps. And at least on Thursday, conditions apparently did not impress the
governing council enough to act yet.
Mr. Draghi also said the E.C.B. was concerned about geopolitical
tensions, making several specific references to the crisis in Ukraine.
Annual inflation in the euro zone was 0.7 percent in April,
according to an official estimate, which is well below the central bank’s
target of close to 2 percent. Such low inflation is risky, some economists say,
because it leaves the euro zone vulnerable to a ruinous downward price spiral
known as deflation that might be set in motion by some sort of shock, like a
worsening of tensions in Ukraine.
Modest inflation is considered healthy, in part because it eases
the burden on debtors in a region where many countries, companies and
individuals are having problems repaying their loans.
The problem
facing the central bank is that, while it is standard practice to keep a lid on
excess inflation by raising rates, inducing an increase in inflation is much
more difficult. It might require the bank to use measures that have never been
tested in the euro zone, such as huge purchases of government bonds or other
assets to pump money into the economy.
Mr. Draghi, the E.C.B.
president, said in April that the bank was prepared to make asset purchases, a
strategy similar to the quantitative easing, or Q.E., used in the United States
by the Federal Reserve. But most analysts did not expect the E.C.B. to take
action yet — and the bank did not on Thursday.
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