Eurozone rates kept on hold at 2%

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The European Central Bank (ECB) has kept interest rates unchanged at 2%, but has left open the option of cutting rates at its next meeting in March.

Rates in the eurozone have been cut four times since September when they stood at 4.25%.

ECB chief Jean-Claude Trichet did not rule out the prospect of a rate cut in March, but he said zero rates were not considered "appropriate".

The ECB is trying to lift the eurozone economy, which is in recession.

However, it has been more cautious in cutting rates than its counterparts in the US and UK.

The Bank of England cut rates by half a percentage point to 1% earlier on Thursday, the fifth reduction since October when UK rates stood at 5%. US interest rates are already as low as they can go.

Inflation target

"We confirm that 2% is not the lowest level that we would have decided and secondly, zero interest rates at this moment is not something we could consider appropriate," said Mr Trichet in response to whether there would be a rate cut in March.

Speaking at a news conference on Thursday, he added that the ECB would have more information in March, but was determined to "do whatever is necessary to ensure the solid anchoring of inflation expectations in line with our definition - less than two but close to 2%".

The ECB is clearly behind the curve Richard Snook, Centre for Economic and Business Research "I don't exclude that we could decrease rates in our next meeting," he added.

"We will see exactly what we have to do taking all into account... I would only say that it's clear we were not in a sustainable mode, sustainable pace at the level of the global economy during the last years and it is not something which is new because we've said that a number of times."

Financial markets had been looking for signs that the ECB might follow in the footsteps of the Federal Reserve and the Bank of England and consider more unconventional monetary policy measures.

This could have included quantitative easing whereby central banks aim to increase the amount of money flowing in the economy by buying assets such as government bonds from banks.

Richard Snook, senior economist at the Centre for Economic and Business Research, says the ECB needs to take bolder action on monetary policy.

"The ECB is clearly behind the curve," he said.

"Global policy rates at zero and coordinated quantitative easing across all major economies is the best remedy for an unprecedented global crisis," he added.