ECB keeps interest rates at record low The European Central Bank has left official interest rates unchanged at their record low, ahead of a second offer to eurozone banks of unlimited three year loans, and a possible deal to save Greece from default. The ECB governing council's decision at a meeting in Frankfurt to leave the main policy rate unchanged at 1 per cent was widely expected. The effects of the €489bn in unprecedented three-year liquidity that the ECB injected into the eurozone financial system in December have yet to feed through completely - and a repeat of the offer later this month could provide a further boost to eurozone fortunes. The eurozone's economic prospects have also shown signs of improving, after Mario Draghi, the ECB president, last month observed "tentative signs of stabilisation in activity at low levels." Although credit data have shown much of southern Europe gripped by a credit squeeze, eurozone purchasing managers" indices have indicated the pace of economic contraction is easing - including in southern eurozone "periphery" countries. Meanwhile, eurozone inflation, at 2.7 per cent in January, remains higher than the ECB's target of an annual rate "below but close" to 2 per cent. Since taking office on November 1 2011, Mr Draghi has cut interest rates twice by a quarter percentage point, returning the main rate to the record low set in the depths of the 2009 recession. But the steps the ECB has taken to provide longer term liquidity have proved more important in turning eurozone fortunes - although the Greek debt crisis could still throw the eurozone back into turmoil. At a press conference in Frankfurt later on Thursday, Mr Draghi will be quizzed over the ECB's plans for its holdings of Greek government bonds, acquired at an estimated cost of €40bn under a bond purchasing programme introduced in 2010 by Jean-Claude Trichet, his predecessor. The ECB is under pressure to forgo profits or even accept losses on its portfolio to ease Greece's debt crisis - but faces a number of legal and political constraints on the help it can offer. However, Mr Draghi may be reluctant to show the ECB's hand ahead of a meeting of eurozone finance ministers in Brussels on Thursday evening, which is due to review progress towards a new Greek bail-out. Mr Draghi may also detail plans to broaden the range of collateral that banks can use to obtain liquidity from the ECB - which could help boost demand in this month's offer of three-year loans. The ECB's council has agreed that, as a temporary measure, banks will be able to use additional bank loans as collateral - but the extra risks involved will be borne by their national central bank. Normally, losses are shared between eurozone national central banks according to the size of their economy. The step has proved controversial, with Germany's Bundesbank expressing concern about a possible lowering of credit standards.