The European Central Bank (ECB) has decided to leave interest rates unchanged at 1 per cent for the month of June, but announced it has downgraded its growth forecasts for the euro zone.

The ECB said it now expected the euro-zone economy to contract in terms of real gross domestic product (GDP) by between minus 5.1 per cent and minus 4.1 per cent in 2009 and by between minus 1 per cent and plus 0.4 per cent in 2010.

ECB president Jean-Claude Trichet said: “After the extremely weak first quarter, activity over the remainder of this year is expected to decline at much less negative rates. After a stabilisation phase, positive quarterly rates are expected by mid 2010″