ECB cuts eurozone growth forecasts The European Central Bank said it would keep its monetary policy "accommodative as long as needed" after cutting its growth forecasts for this year and predicting inflation would fall further. Faced with record unemployment and now predicting that the eurozone's economy would contract further this year, Mario Draghi, ECB president, said the bank's 23-man governing council had discussed a rate cut but decided to keep the main refinancing rate on hold at 0.75 per cent for the eighth consecutive month. "Our monetary policy will remain accommodative as long as needed," Mr Draghi said twice during his monthly press conference, a statement that clashes with the bank's policy, also restated on Thursday, never to "pre-commit" on interest rates. Mr Draghi acknowledged that policy makers discussed cutting rates, and suggested that some on the 23-member council had wanted to lower borrowing costs immediately. In its latest quarterly update, which is usually expressed as a range, the bank cut its growth forecast for 2013 to a midpoint of minus 0.5 per cent from a midpoint of minus 0.3 per cent previously. Its inflation forecast for 2013 is now a midpoint of 1.6 per cent - short of the bank's medium-term target of close to but below 2 per cent. The ECB president signalled the central bank was wary of making its deposit rate negative - a move that would impose a tax on reserves held at the euro area's central banks. "The unintended consequences of a measure like that can be serious," Mr Draghi said. "I think in the past I've used the words "uncharted waters" if we are going to get into that." Mr Draghi was also questioned about the inconclusive outcome of the Italian election, in which a majority voted against austerity measures. The poll has potentially left Italy without the protection of the ECB's bond-buying programme, since that requires a government to first sign up to a programme from the EU's bailout fund, with fiscal strings attached. The ECB president reiterated that it remained up to governments to sign up to a programme if they were to access the outright monetary transactions programme, as its bond-buying programme is known. On its interest rate policy, the ECB's main focus is likely to remain fixing the so-called transmission mechanism by which its rates are reflected in the real borrowing rates charged to households and companies. Since these remain much higher in high-unemployment countries such as Spain and Italy, compared with much more benign conditions in Germany, the ECB can argue that a rate cut would not help where it is most needed as long as its transmission mechanism remains impaired. The bond-buying programme was meant to help fix this. While OMT has successfully brought down the elevated sovereign bond yields of Spain, Italy, Ireland and others, there remains a great disparity between interest rates charged to businesses in different eurozone countries. Underscoring the struggle that eurozone countries are facing to revive growth amid austerity, French fourth-quarter unemployment hit its highest level since 1999, reaching 10.6 per cent. Industry minister Arnaud Montebourg told France Info radio: "Europe and the eurozone are sinking. This is why the government is fighting, with the European Commission, for growth measures to be taken. And in a sign that even the relatively robust German economy, which shrank in the final quarter of 2012, is not entirely out of trouble, official statistics showed that new orders in the industrial sector shrank much more than expected in January. Orders fell 1.9 per cent, month-on-month, against expectations of a slight rise. Demand from Germany's fellow eurozone members fell the steepest in the month, the data showed. Additional reporting by Claire Jones in London