Sept. 5 - As the euro zone shows signs of fragile recovery, the European Central Bank kept interest rates on hold, but said it stands ready to cut rates again or pump more money into the economy if necessary to bring money market rates down. Joanna Partridge reports the on the balancing act required by the ECB and the Bank of England.
Anti-euro protestors take their complaints to the home of the single currency. Political party Alternative for Germany wants to leave the euro and made their views clear outside the European Central Bank. They're campaigning ahead of this month's German election and polls suggest they may win 4% of the vote. Inside, the ECB kept interest rates on hold. That was no surprise, but signs of a euro zone recovery are a new challenge for ECB President Mario Draghi. He broke with tradition in July by committing to low rates for an extended period, But it hasn't brought down market rates - and Draghi has a trickly balancing act. SOUNDBITE: Mario Draghi, ECB President, saying (English): "After six quarters of negative output growth and confidence indicators up to August confirm the expected gradual improvement in economic activity from low levels." Much of the market pressure is down to the U.S. Federal Reserve's decision to cut back its stimulus programme. SOUNDBITE: Mario Draghi, ECB President, saying (English): "We stand ready to act. Whether these developments derive from one source or another, I commented on that before. We haven't yet discussed any coordinated action. You know we have periodic exchanges anyway." In the UK, a stream of more positive data had raised expectations the Bank of England could increase rates, despite new governor Mark Carney's promise to try and hold them for three more years. But it left them unchanged at 0.5%. Lena Komileva from G+ Economics. SOUNDBITE: Lena Komileva, Managing Director, G+ Economics, saying (English): "The forward guidance that the new bank governor introduced in his maiden inflation report in August has so far backfired. The problem with the bank is that first of all the markets are questioning the fundamental rationale behind the bank's forward guidance." The fledgling recovery may have silenced some talk of a euro zone break up. But central banks still have their work cut out protecting the green shoots.