ECB holds key lending rate despite bleaker outlook

The European Central Bank has left borrowing costs in the euro area unchanged. But it has also reiterated its resolve to help debt-stricken nations, with its new bond-buying program yet to be tapped. The European Central Bank (ECB) on Thursday announced it would leave its benchmark interest rate of 0.75 percent untouched despite a worsening business climate in the 17-member eurozone. The decision by the ECB's Governing Council not to lower the interest rate matched most economists' expectations as the central bank had previously emphasized it did not want to ease the pressure on euro-area governments to do their homework and consolidate national budgets through austerity measures. Financial markets had calmed as lenders had been able to borrow huge sums from the ECB at historically low yields and the International Monetary Fund (IMF) put in place further steps to help Greece. Also easing pressures on financial markets had been the ECB's announcement that it planned to relaunch its bond-buying program, officially known as the Outright Monetary Transaction (OMT). Bleak outlook In September, the ECB still predicted the eurozone's economy would grow by 0.5 percent in 2013 and contract by 0.4 percent in the current year, but recession fears have increased since then. ECB President Mario Draghi (pictured above) told reporters on Thursday the central bank had revised downward its projection for growth in the eurozone, now forecasting a 0.5-percent contraction this year, followed by a maximum of 0.3-percent growth in 2013. "Economic weakness in the eurozone is expected to extend into next year, but a gradual recovery should start later in 2013," Draghi said.