ECB keeps rates at 1.5% as expected

The European Central Bank kept interest rates at 1.5 percent as expected, but may signal it is back in crisis mode at its upcoming news conference as the euro zone debt crisis continues to roil the bloc.

Economists had been near-unanimous in expecting the ECB to keep rates on hold, having raised for the second time this year only last month. There was little reaction in the euro or benchmark German bunds.

In a surprise move shortly before the ECB announced its rate decision, the European Commission said it was weighing up increasing the size of the euro zone bailout fund, the EFSF.

Despite the EU Commission's statement that it will reassess the scope of the euro zone's rescue fund (EFSF), its new powers to buy bonds in the secondary market or give states precautionary credit lines will not be operable until they are approved by national parliaments in late September at the earliest.

That leaves the ECB as just about the only bulwark against market attacks on Italy and Spain in the short-term.