ECB takes cautious stance as markets tumble

Frankfurt

THE European Central Bank held interest rates at record lows on Thursday, but the market crash, tumbling bank stocks and ebbing inflation may set the stage for action later in the year.

In December, the Governing Council cut the deposit rate, increased the charge on banks for parking money at the ECB, and expanded its purchase programme to buy chiefly government bonds.

This recent action, albeit short of what many on financial markets hoped for, meant that economists had expected the Thursday move and now shift their attention to possible action later in the year.

"The measures we decided in December were entirely appropriate - and have been effective - based on the circumstances that were prevailing at that time," ECB chief Mario Draghi told a news conference. "Since then these circumstances have changed," Mr Draghi said, noting the 40 per cent fall in oil and change in the euro'…