THE European Central Bank promised yesterday to keep its interest rates at current record low levels for an "extended period" or cut them to support the ailing eurozone economy.

Seeking to calm worries about Portugal, where a political crisis sparked by austerity has rocked markets and driven up borrowing rates this week, Mario Draghi, president of the ECB, assured the country "is in safe hands."

The ECB's governing council voted to hold its key interest rate at an all-time low of 0.5 percent for the third month in a row.

Draghi vowed that "monetary policy will remain accommodative for as long as necessary," in remarks at a press conference.

The ECB's decision-making governing council "expects the key ECB interest rates to remain at present or lower levels for an extended period of time," Draghi said.

"Our exit (from low interest rates) is very distant."

The comments pushed the euro down against the dollar, but sparked a rally in stock prices around Europe, since it was the first time the ECB has ever given such forward guidance.

The decision to issue such "unprecedented forward guidance" was "unanimous", the ECB chief added.

"We had an extensive discussion about a possible interest rate cut," he said.

"But after this extensive debate, we basically unanimously agreed about this forward guidance," he said.

No analysts or ECB watchers had expected the central bank to announce any further policy moves this month after paring back the refinancing rate by a quarter of a percentage point in May.

The ECB also left its other two rates - the deposit rate and the marginal lending rate - at zero percent and 1 percent respectively.

Financial markets have been spooked by the announcement last month that the US Federal Reserve is preparing to phase out its bond-buying program, bringing the prolonged period of loose monetary policy to an end.

And the political crisis in Portugal has sparked fears of a new flare-up in the eurozone crisis.