The European Central Bank has left interest rates on hold despite cutting its forecasts for inflation and growth, as the eurozone’s ailing economic outlook failed to convince policymakers that price pressures had been tamed.

The central bank maintained its benchmark deposit rate at an all-time high of 4 per cent at its meeting on Thursday. But it lowered its forecast for inflation this year from 2.7 per cent to 2.3 per cent, opening the door to possible rate cuts in the coming months.

ECB president Christine Lagarde said: “We are on this disinflationary process and we are making progress. We are making good progress towards our inflation target and we are more confident as a result. But we are not sufficiently confident. We clearly need more evidence and more data. We will know a little more in April, but we will know a lot more in June.”