FRANK­FURT-The Eu­ro­pean Cen­tral Bank with­held the stim­u­lus of an in­ter­est rate cut Wednes­day, keep­ing up the pres­sure on eu­ro­zone politi­cians to take de­ci­sive ac­tion - even as growth pre­dic­tions wors­ened and fears in­ten­si­fied that Spain may need help bail­ing out its banks.

The 23-mem­ber gov­ern­ing coun­cil left its bench­mark re­fi­nanc­ing rate un­changed Wednes­day at a record low 1.0 per cent. ECB Pres­i­dent Mario Draghi cit­ed eco­nom­ic growth fore­casts for a grad­ual re­cov­ery this year in jus­ti­fy­ing the de­ci­sion not to cut rates this time around. Rate cuts are sup­posed to help growth by low­er­ing busi­ness bor­row­ing cost. Some an­a­lysts, how­ev­er, said the bank's ex­pec­ta­tions of on­ly a 0.1 per cent de­cline over the full year were over­ly op­ti­mistic.

An­a­lysts say Draghi's hands-off stance Wednes­day was meant to un­der­line the need for ac­tion on re­struc­tur­ing the eu­ro by the 17-coun­try eu­ro­zone's di­vid­ed and of­ten slow-mov­ing politi­cians. He has urged lead­ers to sketch in a vi­sion of how the economies and fi­nan­cial sys­tems of eu­ro mem­ber coun­tries can be bet­ter linked ahead of a June 28-29 sum­mit where new ideas to save the eu­ro are to be pre­sent­ed.

One rea­son for not cut­ting to­day "was pos­si­bly that the ECB sees cur­rent mar­ket ten­sions as a way of fo­cus­ing politi­cians' minds on re­form ef­forts," said Michael Schu­bert at Com­merzbank. In­vestors took the lack of new mon­e­tary stim­u­lus in their stride, with most Eu­ro­pean stock in­dex­es show­ing mod­est in­creas­es on the day.

Yet there is plen­ty to wor­ry about in Eu­rope. In­vestors are grow­ing in­creas­ing­ly con­cerned that Spain will need out­side help to bail out a bank­ing sys­tem creak­ing un­der the weight of bad re­al es­tate loans. Greece, which has al­ready stuck cred­i­tors with a debt write-down and tak­en two rounds of bailout loans, faces an un­cer­tain fu­ture in the eu­ro ahead of June 17 elec­tion.

Vot­ers may elect a gov­ern­ment that re­jects the painful cut­backs de­mand­ed by oth­er eu­ro­zone coun­tries in re­turn for the bailout loans. If Greece re­jects bailout terms, it could go com­plete­ly bank­rupt and be forced out of the eu­ro. Ei­ther a Span­ish bailout or debt de­fault, or a Greek ex­it could hurt growth in the Unit­ed States and Asia by cre­at­ing loss­es and fear among banks, which are key to the func­tion­ing of the glob­al econ­o­my, and by hurt­ing trade. Many US com­pa­nies get a size­able part of their sales and prof­its from Eu­rope so a re­ces­sion there would im­pact com­pa­nies and economies around the world.

AP