The European Central Bank has left its benchmark interest rate unchanged at a record-low 0.75 per cent.
The bank's President Mario Draghi last week raised expectations the bank might take stronger action by saying the ECB would do "whatever it takes" to save the euro. But he didn't specify what measures he would take.
One of the tools at the bank's disposal would be to help lower the borrowing costs that threaten the finances of Italy and Spain by buying up government bonds in the open market. Such a plan would be hard to pull off, however since it could be interpreted as bailing out government finances — something Germany's Bundesbank has noted the ECB's treaty forbids it from overtly doing.
"The Governing Council," Draghi said in his opening remarks, "within its mandate to maintain price stability over the medium term and in observance of its independence in determining monetary policy, may undertake outright open market operations of a size adequate to reach its objective."
Although a mouthful, that's the ECB's way of saying they will do anything necessary to defend the euro and make sure European nations do not default on their loans.
"The ECB did the least amount possible in saying it could potentially buy sovereign debt only under certain pre-conditions," BMO economist Benjamin Reitzes said in a note following the news conference.
Markets were looking to the ECB Thursday a day after the U.S. Federal Reserve held off taking further steps to support the shaky U.S. recovery. The Fed, too, strongly hinted it might take action soon, but declined to offer details.