The European Central Bank leaves interest rates on hold at 0.5 per cent, and predicts a gradual recovery later in the year - but warns against complacency. Kirsty Basset reports.
Tens of thousands march against austerity in Brussels. Workers are worried about pay cuts and losing their jobs. (SOUNDBITE) (French) PROTESTER, PETER VANDELAYDEN, saying: "First, they tell you they'll freeze your salary for two years, then they say they're extending it to 8 years. They also want to make it easier to fire people. I'm here because this must stop." In Frankfurt, European Central Bank President Mario Draghi urged governments to maintain the pace of deficit and debt reduction, despite predicting a gradual recovery later this year. (SOUNDBITE) (English) PRESIDENT OF THE EUROPEAN CENTRAL BANK, MARIO DRAGHI, SAYING: "Don't get too optimistic about the present market condition. Don't interpret the present market condition as one that would allow any protracted relaxation of fiscal standards without undertaking structural reforms at the same time." The ECB slightly lowered its economic outlook for the euro area this year - but kept its main interest rate on hold at half a percent as expected. (SOUNDBITE)(ENGLISH) ECB PRESIDENT MARIO DRAGHI SAYING: "There wasn't any directional change that would justify taking action at this point in time. Having said that I can only repeat what I said last time. We will monitor very closely all the incoming developments and will stand ready to act." Draghi said the council discussed the possibility of cutting the rate at which lenders deposit money with the central bank to below zero - but was keeping this option on the shelf for now. The Bank of England also decided to keep its rates at 0.5 per cent - and left its quantatative easing target unchanged. It was Bank of England governor Mervyn King's final rate setting meeting - he'll be replaced by former Canadian central banker Mark Carney. Chief UK economist at BNP Paribas David Tinsley says he'll face a number of challenges. (SOUNDBITE) (ENGLISH) CHIEF UK ECONOMIST AT BNP PARIBAS, DAVID TINSLEY SAYING: "For one thing there's a management task at the Bank of England - integrating the PRA - the new structure into the bank and second to that there's a task of ensuring that UK banks have sufficient capital to expand lending. Those things are probably the major tasks facing him. And then on top of that there is this decision to be made about how loose or how looser monetary policy should be." European shares reversed early gains to close lower after the ECB announced it would not be taking any fresh policy action.