The European Central Bank kept interest rates on hold today as the economic outlook worsens and Spain resists asking for a bailout that would open the door to ECB bond purchases.

Policy makers meeting in Frankfurt left the benchmark rate at its historic low of 0.75 percent, as predicted by 62 of 63 economists in a Bloomberg News survey.

ECB president Mario Draghi will brief reporters on the decision at 2.30pm.

Mr Draghi yesterday fuelled speculation that the ECB might put rate reductions back on the agenda, saying the debt crisis is starting to hurt Germany – the pillar of economic strength in the euro area - and inflation risks are "very low."

Still, Mr Draghi has acknowledged in the past that rate moves are less effective than they should be because distorted financial markets are interrupting the transmission of ECB policy.

"In normal times, with the economic outlook in Europe, a rate cut would probably be justified," said Nick Kounis, head of macro research at ABN Amro Bank in Amsterdam.

"But we're not in normal times and a rate cut won't achieve anything."

The Bank of England today left its key interest rate at a record low of 0.5 per cent and refrained from expanding its quantitative-easing program.

Spanish Reluctance While the ECB's pledge to buy government bonds has calmed markets and reduced borrowing costs in Spain and Italy, Spanish prime minister Mariano Rajoy is resisting making a request for aid from Europe's bailout fund, a pre-requisite for the ECB to consider intervention.

Mr Rajoy said on November 6 he needs to know how much the ECB would push down Spain's bond yields before his government applies for aid and signs up to the conditions attached.

"We fully expect Mr. Draghi to continue to emphasize that the decision on calling for help rests solely in the hands of the Spanish government," said Nick Matthews, senior European economist at Nomura International in London.

Spanish bond yields rose today after Market News International, citing unidentified Eurosystem and European Union officials, said the ECB hopes it doesn't have to use its bond- purchase program and that Spain is unlikely to seek aid this year.

Spain's 10-year yield climbed six basis points to 5.75 percent.

It's still down from 7.62 per cent on July 24, two days before Mr Draghi declared he would do whatever is needed to preserve the euro.

Bloomberg