The European Central Bank left its key interest rate unchanged on Thursday, as policy makers took a wait-and-watch stance after a reduction last month.
The Governing Council led by ECB President Mario Draghi maintained the main refinancing rate at a record low 0.50 percent, in line with economists' expectations. The move came after a quarter-basis point reduction in May, the first rate cut in nine months.
The bank also held the marginal lending facility rate at 1.50 percent, following a 50 basis points cut last month. The zero deposit rate was also left unchanged.
Draghi will hold the post meeting press conference at 8.30 am ET in Frankfurt, where he is expected to unveil the latest ECB staff macroeconomic projections that are unlikely to see any major revisions.
He is also expected shed some light on steps to boost lending to small and medium-sized businesses. The European Investment Bank is reportedly exploring new financing tools to help alleviate the financial constraints on SMEs.
Last week, the Paris-based Organization for Economic Co-operation and Development urged the ECB to do more even as interest rates remain at record low. Although Draghi hinted at the prospect of negative deposit rates last month, such a move is highly unlikely in the near-term.
"Renewed warnings over recent weeks from several Governing Council members about the potential side-effects of negative deposit rates have perhaps reduced the likelihood of an imminent rate cut," Capital Economics Senior European Economist Jennifer McKeown said.
The economist expects Draghi to renew his pledge that the Bank "stands ready to act" at today's press conference, as the business surveys point to continued recession, inflation is still below target and bank lending is falling.
He may also restate his opinion that the side-effects of negative deposit rates could be countered by the central bank, hinting at a rate cut in coming months, she noted.
"He is unlikely to promise the imminent and bold action that would be needed to make a meaningful difference to the economic outlook or to gain ground on more proactive central banks elsewhere," McKeown said.
The 17-nation bloc is undergoing its longest recession in history, with GDP stuck in negative terrain over the last six quarters. The economy shrank 0.2 percent in the first quarter of 2013. Eurozone inflation rose to 1.4 percent in May, accelerating for the first time in nine months.
Earlier this week, Draghi said in a speech in Shanghai that there are a few signs of a possible stabilization in the euro area, but the economic situation remains challenging. He forecasts a very gradual recovery starting the latter part of this year.
In March, the ECB staff lowered the growth forecast for 2013 was lowered to 0.5 percent and the projection for 2014 to 1 percent. Inflation was projected at 1.6 percent for this year and 1.8 percent in 2014.
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