FRANKFURT, Feb 5 - The European Central Bank left euro zone interest rates unchanged on Thursday as had been widely expected, with inflation likely to remain benign as a fledgling economic recovery takes hold. The minimum bid rate at the ECB's weekly refinancing tenders remains at a record low of 2.00 percent, the ECB said. Most analysts expect the central bank to delay a first rate rise since late 2000 until well into this year, possibly even 2005. All but two out of 69 economists in a poll last week had said the ECB would leave rates unchanged at this meeting. They see the ECB biding its time on rate moves, even as the Bank of England raised its key rate by a quarter-point to 4.0 percent on Thursday, its second rise in three months, citing a more broadly-based world recovery as supporting the move.
Some analysts say the ECB will ease borrowing costs should the euro, which gained 20 percent against the dollar last year , rise to even stronger levels and stay there. But the currency's recent drop against the dollar has taken pressure off the ECB to offset rapidly the negative impact on exports. Currency markets are on tenterhooks to hear what finance ministers and central bank chiefs of the Group of Seven richest nations will say about global currencies at this weekend's meeting in Florida. However, a firm statement to talk up the dollar is seen as unlikely. The ECB last month said that stronger global demand should at least partially offset the strong euro's dampening effect on the euro zone economy. This might enable it to maintain its December forecasts of a budding recovery and benign inflation.//