ECB holds rates but warns on Hungary

The European Central Bank has held interest rates at 1% but president Mario Draghi has voiced concerns over the situation in Hungary.

The ECB cut rates in both November and December, the first two months of Draghi's tenure as president, but was widely expected to keep rates on hold today,

Draghi gave little indication future rate cuts are on the horizon in his subsequent press conference, and once more argued against extended the ECB's bond purchase programme. He also warned substantial downside risks continue to exist for the eurozone.

He said the ECB's 3-year long-term refinancing operation have helped prevent a much more serious credit contraction.

"The more time that passes, the more it seems effective," he said.

The euro strengthened against the dollar following the press conference, moving back above $1.28.

Draghi added the ECB is worried over issues in Hungary, where talks with the IMF have stalled due to concerns about the country's attempt to limit the independence of its central bank.

"On Hungary, I have to say that we are really very concerned. The ECB is really very careful about signs of pressure being put on decision-making bodies. I think these pressures are inconsistent with the spirit of the [EU] treaty," he said.