Turmoil in financial markets and concerns over China and other emerging markets will prompt a March review of the European Central Bank’s monetary policy, president Mario Draghi said yesterday, holding out the prospect of further loosening.

The euro eased against the dollar as Draghi, speaking after the ECB kept its main rates on hold, told reporters the bank expected rates to “stay at present or lower levels for an extended period of time”.

“As we start the new year, downside risks have increased again amid heightened uncertainty about emerging market economies’ growth prospects, volatility in financial and commodity markets and geopolitical risks,” he said.

“It will therefore be necessary to review and possibly reconsider our monetary policy stance at our next meeting in early March,” he said, creating potential for earlier action than many in the market had expected.

Many analysts had been predicting a further 10-basis-point cut in the existing -0.30 deposit rate, but not until the June meeting of the bank’s policymakers. In December, the ECB Governing Council cut the deposit rate, increased the charge on banks for parking money at the ECB and expanded its €1.5 trillion quantitative easing programme to buy chiefly government bonds.

Defending the measures, which fell short of some investors’ expectations, Draghi said they were “entirely appropriate and effective” given what was known at the time, pointing out that the price of oil had slumped no less than 40 per cent since.