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Eurozone Improvement Means ECB Set To Leave Rates

While the ECB's benchmark, the rate at which it loans to private banks, hasn't changed, some money market and bond market rates that determine what banks and companies actually pay for money have risen. The ECB doesn't want to see that because it wants rates as low as possible to help the recovery.

Market rates have gone up because people are anticipating the Fed will reduce its bond-buying program aimed at lowering long-term rates, and because of speculation the European and global economies may recover faster than expected.

"The ECB was very cautious in its assessment of the economic outlook today, caution we think is warranted," Marie Diron, senior economic adviser to Ernst & Young, said in an emailed statement. She said the forecast growth of 1 percent next will "only be enough to stabilize unemployment at high levels."

Draghi also said the ECB would not agree to any forgiveness of the debt Greece owes on government bonds held by the ECB. European leaders have admitted that Greece may need more financial assistance even after two rounds of bailout loans from the other euro countries and the International Monetary Fund.

The ECB is one of Greece's creditors, but takes the stance that forgiving debt would violate the EU treaty's regulation that the central bank cannot finance governments.

"The answer is no," said Draghi.

Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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