European Central Bank leaves interest rates unchanged

05 August 2010 14:12  [Source: ICIS news]

LONDON (ICIS news)--The European Central Bank (ECB) left interest rates for the 16-nation eurozone unchanged on Thursday at the record low level of 1.0% for the 15th straight month.

The bank had cut its key rate several times from the October 2008 level of 4.25% as it tried to take Europe's economy out of deep recession. The interest rate has remained at 1% since May 2009.

At a monthly news conference later on Thursday, ECB president Jean-Claude Trichet, was expected to be in a more positive move over the future of Europe's economy, as he looks at alternative ways to stimulate growth in the eurozone.

Since the ECB last considered its rates last month, Europe has published the results of "stress tests" on banks across the continent, which hoped to reassure markets that institutions were stable enough to withstand another sharp economic downturn.

Out of 91 banks only only seven failed the tests, which has returned confidence in the banking markets and bank-to-bank lending.

Trichet was also expected to provide a hint on whether banks would continue to have access to unlimited ECB cash for the rest of the year, past the current deadline of October.

Earlier, the Bank of England announced it would hold interest rates at 0.5% for the 15th consecutive month and leave its quantitative easing policy unchanged.

On 7 July, official statistical office Eurostat announced that Europe’s economy had continued to claw its way out of recession during the first quarter of 2010 with both the EU and eurozone member states recording a GDP increase of 0.2% compared with the previous quarter. However it was expected that Europe's economic growth would slow down in the second half of the year.

($1 = €0.76)

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By: Franco Capaldo
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