European Central Bank leaves rates unchanged at 1%

06 May 2010 15:22  [Source: ICIS news]

LONDON (ICIS news)--The European Central Bank (ECB) on Thursday left interest rates unchanged at the record low level of 1% for the 12th consecutive month.

The decision was widely expected, although the bank is under pressure to consider some action in response to the pressures put on eurozone fiscal policy by the financial crisis.

Domestic price pressure remained low and counteracted inflationary trends in faster-growing economic regions, ECB president Jean-Claude Trichet and the bank’s vice president, Lucas Papademos, in a prepared statement.

“We expect the euro area economy to expand at a moderate pace in 2010, but growth patterns could be uneven in an environment of high uncertainty,” they added.

“As regards fiscal policies, call for decisive actions by governments to achieve a lasting and credible consolidation of public finances.

“The latest information shows that the correction of the large fiscal imbalances will, in general, require a stepping-up of current efforts,” they added.

Fiscal consolidation measures will have to exceed “substantially” the annual structural adjustment of 0.5% of GDP set as a minimum requirement in the eurozone’s Stability and Growth Pact, the bank officials said, while welcoming the economic and financial programme just approved by debt-laden Greece.

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By: Nigel Davis
+44 20 8652 3214

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