European Central Bank leaves interest rates unchanged

The European Central Bank has left interest rates unchanged, waiting to see what effect the war in Iraq will have on Europe's sluggish economy before deciding on another growth-spurring rate cut.

The decision by the bank's governing council at a meeting in Rome leaves the refinancing rate at 2.50%, where it has been since a March 6 cut of a quarter percentage point.

The refinancing rate helps determine the cost of short-term central bank credits to commercial banks, and serves as a benchmark for other rates.

Commerzbank economist Michael Schubert said a long war could mean a downward spiral, while a quick end could unleash new business activity.