European Central Bank leaves rates on hold

The European Central Bank has opted to leave its main interest rate on hold at 0.75 per cent for a fifth consecutive month.

Bank president Mario Draghi says the bank now predicts the euro economy will shrink by about 0.5 per cent this year, and again by 0.3 per cent next year but return to growth of between 0.2 and 2.2 per cent in 2014.

The bank has also downgraded inflation forecasts.

Mr Draghi says persistent uncertainty is hampering economic activity.

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