The European Central Bank (ECB) has shrugged off pressure to raise interest rates, leaving its main rate unchanged at 3.25%.

Most pundits tip the ECB to begin raising rates at some point this year, following the lead of a swathe of central banks around the world, from Sweden to Australia.

But its two closest counterparts, the US Federal Reserve and the Bank of England, have postponed rate rises so far.

The patchy nature of Europe's economic recovery has persuaded the ECB that lower interest rates may be beneficial for some time to come.

The ECB's key refinancing rate has remained unchanged since November, and is at its lowest level since February 2000.

Euro boost

The relative strength of the euro was a major argument in favour of steady rates.

After consistently falling against the dollar for the past couple of years, the euro has bounced back to 16-month highs in recent weeks, as the US currency sagged worldwide.

This eliminates any potential pressure from the currency markets for a hike.

At the same time, Europe's economy has avoided the recession that looked possible late last year, but hopes that it might start to grow resolutely have proved unfounded.

Consumer confidence has remained high, and the eurozone as a whole grew by 0.2% in the first three months of this year, but performance in the crucial service sector has remained sluggish.

Germany, the eurozone's biggest economy and a victim of last year's recession, has been the slowest to get off the ground.

Price perils

The sole major argument in favour of a quick rate hike is the lingering problem of eurozone inflation, which refuses to fall as quickly as the ECB would like.

Annual inflation is predicted to fall to 2% in May, but some economists fear it may miss that target.

Officially, the ECB is bound to consider only inflation when it makes its interest rate decision, and some commentators claim to detect a shift in the Bank's rhetoric towards favouring high interest rates.

Ahead of the ECB's decision, however, the financial markets were heavily inclined to tip unchanged rates.