ECB keeps interest rate at 0.25pc

The European Central Bank (ECB) has kept its benchmark interest rate at 0.25 per cent. The bank last cut rates to a record low in a surprise decision in November. Inflation in the eurozone region slowed to 0.7 per cent in January from 0.8 per cent in December. Despite fears of deflation in the eurozone, the bank believes the economies of the 18 countries in the zone are recovering after the bloc emerged from recession last summer. At a press conference to explain the decision, Mario Draghi, President of the European Central Bank said: "We have to dispense with this idea of deflation. "The modest recovery is showing encouraging signs. The demand side is getting stronger, not weaker. We have to treat the recovery with extreme caution. It is very fragile. It is starting from very low levels but it is proceeding." On Wednesday, Markit's Eurozone Composite Purchasing Managers' Index indicated that growth in the private sector last month was its strongest for two and a half years, according to a news agency.